Van Lanschot printed a twice-subscribed Eu500m 10 year issue today (Wednesday), and bankers said the result is further proof the market is confident in Dutch debt in spite of its election next month, given relative stability in DSLs and after a successful 10 year for the Dutch government yesterday.

After announcing a mandate for a Eu500m no-grow 10 year issue yesterday, F van Lanschot Bankiers leads BNP Paribas, Credit Suisse, ING, LBBW and Rabobank launched the deal this morning with guidance of the mid-swaps plus 23bp area. After almost one hour and 15 minutes, the leads announced orders had exceeded Eu700m.

Guidance was then revised to the 20bp area, plus or minus 1bp will price within range, on the back of orders in excess of Eu1bn, before the spread was set at 19bp, with the book closing at around Eu1bn, pre-reconciliation.

Bankers saw fair value for the new issue at around 15bp, citing the June 2026s of fellow Dutch CPT issuer NIBC Bank at around 11bp, mid, and noting that Van Lanschot trades 3bp-4bp back of NIBC across the curve.

“It’s gone really well, and we’re particularly pleased to be pricing the deal with a final NIP of around 4bp,” said a banker at one of the leads. “That’s pretty impressive if you consider that this is a 10 year, that it’s a conditional pass-through, and given the current rates environment, with all the volatility in the govvies market.”

European rates have continued to widen this week as investors price in political risks stemming from factors including the Dutch general election, which will be held on 15 March, and the French presidential election, which will commence in April.

The strong demand for Van Lanschot’s deal was hence deemed a vote of confidence in Dutch covered bonds and Dutch debt more generally, coming on top of a successful Eu5.7bn July 2027 deal for the Netherlands yesterday (Tuesday). That deal was priced at the tight end of guidance, at a spread of 33bp over Bunds, on the back of books approaching Eu13bn.

“We judge that the relatively tight pricing, the large book size and the resulting bid to cover of 2.28, which is the highest of Dutch 10 year benchmark deals since 2009, reflect the overall resilience of Dutch bonds and show that investors are not too worried about Dutch political risk in the run-up to the general elections,” said Kim Lui, senior rates strategist at ABN Amro.

Market participants said the lack of volatility in DSLs relative to that in OATs is because a PVV-led government after the election is still considered unlikely, with mainstream Dutch parties having ruled out forming a coalition with Geert Wilder’s party.

“Today’s deal for Van Lanschot shows that investors are for now confident in the Netherlands,” said a banker away from the deal, “perhaps more so than in France.

“If the other Dutch issuers have deals to do, I would not be surprised to see them come sooner rather than later, in case the markets become less certain.”

Van Lanschot’s deal is the second Dutch benchmark covered bond of the year, following a Eu2bn 15 year for ABN Amro on 4 January. It is Van Lanschot’s third covered bond, with its last a Eu500m seven year issue in March 2016.

Eika Boligkreditt announced a mandate this afternoon for a Eu500m no-grow seven year covered bond. Commerzbank, Crédit Agricole, Deutsche and Nordea have the mandate. The deal is expected tomorrow, subject to market conditions.

The Norwegian issuer’s last euro benchmark covered bond was a Eu500m seven year issue in April. The deal will be the second Norwegian benchmark this week, following a Eu500m seven year for Sparebanken Vest Boligkreditt yesterday that was priced at 3bp over mid-swaps.