Cariparma attracted around Eu2.6bn of orders for a dual tranche, Eu1.5bn eight and 15 year OBG issue today (Wednesday), which bankers said benefitted from the relative rarity of the maturities – with the longer tranche being the first Italian 15 year – and offers encouragement to other peripheral issuers.

The longer dated tranche of Cariparma’s offering is the first 15 year benchmark covered bond from Italy, according to syndicate bankers at the leads, and the longest benchmark from the periphery since Spain’s Santander sold a Eu1.25bn November 2034 cédulas in November 2014.

After announcing a mandate for a dual-tranche, September 2024 and September 2031 issue yesterday, Cariparma leads BayernLB, Crédit Agricole, LBBW, Lloyds, Mediobanca, Natixis and UniCredit launched the short eight year tranche with initial price thoughts of the 25bp over mid-swaps area and the short 15 year tranche with IPTs of the 45bp area this morning, while indicating that the deal would have a total size of around Eu1.25bn.

The size of each tranche was then set at Eu750m, and guidance for the eight year tranche at the 23bp area plus or minus 2bp will price within range, and guidance for the 15 year tranche at the 43bp area plus or minus 1bp will price within range, on the back of combined orders “well above” Eu2.25bn.

The eight year tranche was then priced at 21bp and the 15 year tranche at 42bp, with the combined book closing at around Eu2.6bn, with close to 167 orders. A syndicate banker at one of the leads said demand was “pretty balanced” between the two maturities.

“It’s a very good result,” said the lead syndicate banker. “This outcome was made possible because we were offering positive yields, coming with a comparably limited size, and delivering a name that hasn’t already been to the market this year.”

He added that the 15 year tranche was set to be priced with a coupon comfortably above 1%, with 15 year swaps at 0.68% this morning.

“That was a key driver for this trade,” he said.

Bankers away from the leads agreed the deal had gone well.

“The books are very impressive,” said one. “It’s not surprising, as it’s a rates product, it has a decent rating, and it’s got spread.

“I don’t know where else you’ll get a 15 year with 42bp, and the 15 year universe for covered bonds is fairly limited.”

Bankers at and away from the leads suggested that demand for both tranches had also been boosted by the relative rarity of the maturities.

The last benchmark euro covered bond with a maturity of 15 years or longer was a 19 year Pfandbrief for Deutsche Pfandbriefbank in April.

“This is a very special deal, as we have never seen a 15 year tenor from Italy,” said the lead syndicate banker. “I expect it was quite a big surprise for market participants.

“The eight year was also made possible by the recent pick-up in yields, and is the first eight year for quite a while.”

Syndicate bankers at and away from the leads said the September 2024 tranche, at 21bp, offered a new issue premium of around 3bp, seeing Cariparma’s January 2022s and June 2023s at 16bp, bid. They also cited March 2023s from Intesa at 7bp and 2026 paper from Intesa, UBI and UniCredit at 16bp-17bp.

Fair value for the 15 year tranche is more difficult to calculate, bankers said, given the lack of 15 year supply from Italy. A syndicate official at one of Cariparma’s leads said the 15 year, at 42bp, offered a new issue premium of around 6bp-7bp, based on the curve of Cariparma parent Crédit Agricole – which had March 2031s quoted at minus 6bp, bid – and the pricing differential between French and Italian paper.

He said the higher premium for the longer dated tranche was in line with those offered by 15 year deals earlier in the year.

The eight year tranche came around 65bp inside BTPs and the 15 year tranche around 55bp inside, according to syndicate bankers at the leads.

Cariparma’s deal is seen as offering encouragement to other peripheral issuers, with supply from Spain and Italy having been limited in recent months.

“It’s good to see hard proof that this market works for peripherals, and especially nice to see such a successful dual tranche trade,” said a syndicate banker.

Spain’s Ibercaja Banca announced a mandate yesterday for a seven year euro benchmark cédulas hipotecarias, which is expected following a roadshow and could be the first benchmark from Spain since 2 June.

The last benchmark covered bond from Italy was a Eu1bn 10 year issue for UBI Banca that was priced at 19bp over mid-swaps on 5 September.