SNS Bank sold its first benchmark covered bond in over four years today (Monday), attracting over Eu1.2bn of orders to a Eu500m 15 year issue that was deemed to have been well positioned versus other long dated Dutch supply and different from other supply today.

SNS has not issued a benchmark covered bond since being nationalised in 2013, with its last deal having come in August 2012. The Dutch issuer announced on 27 September that it will as of 1 January change its name to de Volksbank, sparking speculation that it could return to the covered bond market, before announcing a European roadshow ahead of a long dated deal.

SNS Bank leads ABN Amro, Commerzbank, Credit Suisse, and Société Générale launched the 15 year issue today with initial price thoughts of the 12bp-15bp over mid-swaps area. After one hour the leads then announced that orders had surpassed Eu750m, before setting guidance at 10bp plus or minus 1bp on the back of over Eu1.1bn of orders. The deal was then re-offered at 9bp, with the book closing at over Eu1.2bn.

“For an issuer that has been out of the market so long, getting a two-and-a half times subscribed book is a pretty damned good result,” said a syndicate banker at one of the leads. “That’s with only a 4bp premium, which is not bad at all, and for a 15 year rather than an easy standard seven year.”

Syndicate bankers said the deal offered a new issue premium of around 4bp, seeing ABN Amro April 2031s at minus 6bp, mid. They noted that SNS Bank’s outstanding covered bonds tend to trade 7bp-8bp wider than ABN Amro’s in medium maturities.

“That takes you to around 1bp-2bp, and if you then add a few more basis points for rarity and for the small issue size, you get to fair value of around 5bp.”

Bankers away from the leads agreed that the final spread represented a good result.

“It’s a good price for an issuer that’s been absent for a long time and potentially isn’t the most straightforward credit, but also a good price for investors, even if this sort of deal is more about the yield,” said a syndicate banker away from the leads.

Bankers said SNS’s deal and longer dated issuance in general has been supported by a back-up in yields over recent weeks, with issuers now able to offer more attractive yields than had been the case during the summer.

“Rates have been moving consistently higher for the last couple of weeks, which is supportive for this kind of yield-driven trade,” said a syndicate banker away from the leads. “With the 15 year swap rate at 0.8% this morning they might not quite hit the 1% coupon mark, but this is still supportive.”

The new issue had not been priced when The CBR went to press, but a banker at one of SNS’s leads said the deal was likely to offer a coupon of 0.875%.

The new issue’s longer maturity also helped SNS find demand on what was a relatively busy day in the market, bankers said, with PKO Bank Hipoteczny and BNP Paribas Fortis also offering euro benchmarks.

“The 15 year maturity means that SNS stands out from the crowd,” said a banker. “Of course, the investor universe is a different and rather smaller one in that part of the curve, but it meant that these deals were not competing directly.”