A BBVA Eu1bn 10 year cédulas was priced in line with IPTs and barely subscribed today (Monday), with the deal’s struggles attributed to a lack of enthusiasm for long-dated and peripheral paper amid persistent volatility in rates, while an unappealing spread versus Bonos was also cited.

Volatility that took hold after Trump’s US election victory surprised markets on Wednesday carried over into the start of the week, with a back-up in rates that saw the 10 year Bund yield up 4bp at the open and continue to rise through the morning.

“The market is far from closed, but conditions were weaker this morning and rates are still all over the place,” said a syndicate banker. “With that in mind, all eyes were on today’s deals.”

Banco Bilbao Vizcaya Argentaria (BBVA) leads Barclays, BBVA, Commerzbank, Mediobanca, Natixis and UniCredit launched the 10 year cédulas with guidance of the low 20s over mid-swaps area, before revising guidance to the 23bp area on the back of over Eu900m of orders. The spread was then set at 23bp and the size at Eu1bn.

“It looks like they found it slightly tough today,” said a banker away from the leads. “You can argue what exactly ‘low 20s’ means, but it looks as though the spread didn’t move and the deal was only just subscribed.”

Some bankers away from the deal questioned both the decision to launch a peripheral covered bond and the choice of maturity, given the movements in yields. They noted that the Spanish deal had received substantially less demand than a Eu1bn seven year issue for Finland’s Nordea Mortgage Bank, which attracted over Eu1.5bn of orders today.

“This maturity isn’t what people want,” said one. “I was surprised by the choice of tenor, and personally, I’d have recommended something in the context of seven years.

“On top of that, I’m not convinced today was the best day for a peripheral trade, especially given the deterioration in relative value versus the sovereign.”

Bankers said the deal came 65bp inside Bonos, with government bonds having widened amid the sell-off.

Others noted that Nordea’s debut issue had been preceded by a comprehensive European roadshow, whereas BBVA’s deal was first announced when the books were opened this morning.

“With Nordea, and with the other trades that are in the pipeline and have been well publicised, I can see the sense in entering the market,” said a banker. “But I don’t get the rationale in BBVA sneaking out today, unless they expect the situation may get even worse.”

Bankers acknowledged, however, said that the issuer had done well to get the deal done in a challenging market.

“BBVA is a national champion, it has the ECB bid, and the level offers a good pick-up versus the core and semi-core jurisdictions that have provided most of the recent supply,” said one. “This was enough, and while it is not the most eye-catching result, they crossed the finish line and got a pretty good price.”

The new issue is the tightest benchmark cédulas with a maturity of 10 years or longer since March 2015, when CaixaBank priced a March 2025 issue at 15bp.

Bankers said the deal offered a new issue premium of around 10bp, seeing BBVA February 2025s at 7bp, mid, and Santander January 2026s at 9bp.

The new issue is BBVA’s second benchmark covered bond this year, following a Eu1.25bn seven year issue in March. It is only the third benchmark covered bond from Spain in the second half of 2016, following a Eu500m seven year cédulas for Ibercaja on 10 October and a Eu1bn seven year for Sabadell on 13 October.

Spain’s Caja Rural de Navarra is expected to launch a sustainable cédulas hipotecarias issue this week, having completed a European roadshow on Friday. Bankers at the lead said the deal is likely to emerge in the coming days, subject to market conditions.