Ibercaja sold its first benchmark covered bond in six years today (Monday), attracting over Eu1.25bn of orders to a Eu500m seven year cédulas that was deemed as offering an “interesting” pick-up versus top tier Spanish issuers, while expectations for further supply are modest.

The deal is Ibercaja’s first benchmark cédulas since 2010, when it sold a Eu500m April 2015 issue, and also the first benchmark covered bond from Spain in over four months, with the last being a Eu1bn eight year cédulas for Banco Sabadell at 40bp over mid-swaps on 2 June.

Following investor meetings at the end of last week, Ibercaja Banco leads Crédit Agricole, Commerzbank, HSBC and Natixis launched the Eu500m no-grow seven year cédulas hipotecarias this morning with guidance of the 25bp-28bp over mid-swaps area. Guidance was then revised to the 23bp area, plus or minus 1bp will price within range, on the back of books above Eu1bn. The spread was then fixed at 22bp, with the book closing at above Eu1.25bn.

“It’s clearly gone well, for what is essentially a debut and for what could have been a relatively tricky name,” said a syndicate banker away from the leads. “It’s a decent outcome, even if the price looks generous compared to secondaries.”

Bankers said it is difficult to calculate fair value for the new issue, given Ibercaja’s long absence from the market and a lack of similarly rated cédulas.

Syndicate officials at the leads cited Bankia March 2023s, which like Ibercaja’s issuance are rated single-A, as the most relevant comparables, seeing them quoted at 4bp, mid. Ibercaja’s cédulas are rated A2 by Moody’s and A+ by Standard & Poor’s, whereas Bankia’s are rated A+ by S&P and A by Fitch.

Prior to the deal, bankers had suggested that Ibercaja’s return would likely offer some spread pick-up versus the top tier Spanish issuers, most of which have higher covered bond ratings. Syndicate bankers at Ibercaja’s leads cited 2023 paper from CaixaBank at flat, mid, and BBVA at minus 4bp, and 2024s from Caja Rural de Castilla-La Mancha at 7bp and Sabadell at 6bp. The cédulas of each are rated Aa2 by Moody’s.

“That pick-up no doubt helped make the deal more interesting to investors,” said a banker away from Ibercaja’s leads. “We’re still in a situation where anything with a bit more spread and a bit more yield should go well.”

Bankers noted that the pricing of the deal was roughly in line with that of a Eu750m eight year OBG for Italy’s Cariparma on Wednesday, which was sold as part of a dual tranche issue, alongside a Eu750m 15 year tranche. The eight year OBG was priced at 21bp and seen trading around 2bp tighter today.

Bankers expect more covered bond supply this week, but noted that the visible pipeline is relatively thin, with only PKO Bank Hipoteczny and DBS Bank among the issuers that have announced mandates and are likely to be in a position to enter the market this week.

PKO Bank Hipoteczny will on Wednesday conclude a roadshow ahead of a potential euro-denominated debut, while a first euro benchmark from DBS is also awaited, after it completed a roadshow last month.

“There’s more to come,” said a syndicate banker, “but it still looks like being a more modest October than we’re used to.”