Singapore’s DBS laid down a tight marker with its long awaited first euro-denominated benchmark covered bond today (Monday), a Eu750m (S$1.14bn) seven year issue that bankers said was launched with aggressive initial guidance and ultimately offered little to no new issue premium.

DBS’s new issue is only the second euro benchmark covered bond to be issued out of Asia, following a Eu500m March 2021 deal for fellow Singaporean issuer United Overseas Bank in March of last year. DBS inaugurated the Singaporean market in July 2015, with a $1bn August 2018 issue, while its only other benchmark covered bond was a A$750m June 2019 issue last May.

DBS and joint leads Deutsche Bank, JP Morgan, SG and UniCredit launched the seven year issue this morning with guidance of the 17bp over mid-swaps area, for a maximum size of Eu750m. The leads later announced that books had exceeded Eu750m, with the guidance unchanged, before the spread was ultimately fixed at 15bp on the back of books over Eu950m. The size was later set at Eu750m.

“It’s certainly a good outcome they’ve achieved here,” said a banker away from the deal. “The price is really impressive, especially considering that this is a debut, although the book isn’t as great as some of the other deals out there nor as good as some might have expected for a high quality, long-awaited deal like this one.”

DBS’s euro debut had been awaited since September, when the issuer held a roadshow across Europe and Asia, ahead of a potential mid-term maturity covered bond.

Bankers away from the leads disagreed on the merits of the final outcome, some suggesting that demand was disappointing.

“The initial update and slightly slow execution gave the impression that, while they clearly were not exactly struggling, the book was not developing as quickly as you’d expect,” said a syndicate banker away from the leads. “They were the first issuer into the market today but the last to get over the line, and I think the reason for that was the price.”

A syndicate banker at one of the Singaporean bank’s leads said only that it was difficult to put a number on the concession, given that it was DBS’s first deal in the currency, but noted that it had been priced close to the curves of issuers from Australia and New Zealand.

“I’d just say that it didn’t offer much in terms of a new issue premium,” he said.

Some bankers away from the leads said DBS’s deal offered at most 1bp new issue premium, with some stating the deal came flat to fair value, citing UOB’s March 2021s at 10bp-11bp, bid.

“At the 17bp area, they started very ambitiously,” said a banker away from the leads. “If they had landed at 17bp after starting with wider guidance you would say that was a good result for a debut, but starting at that level clearly signals to the market that you are aiming to price with very little to no new issue premium.

“That is pretty aggressive for an issuer making its debut in this currency, irrespective of DBS being a good name and the fact that people have been waiting for Singaporean supply for some time.”

Another banker away from the leads said the deal was an “obvious success”, pointing to the price.

“The initial guidance and the limited size communicated perfectly clearly that the issuer’s priority was the price, so I think it’s on those terms that this deal should be judged,” he said. “I can’t remember the last time we had a debut that was priced so close to fair value, so you have to say it’s a great result.

“Typically, first time issuers pay up a fair bit, but DBS have put down a very tight marker.”