Banco Commercial Português (BCP) sealed a successful return to the capital markets after a lengthy restructuring process with a Eu1bn seven year OH this week, finding balance in the pricing, according to a funding official, as investors looked at the issuer and Portuguese risk “with different eyes”.

The new issue was BCP’s first benchmark covered bond since 2009, when it sold a Eu1bn seven year.

A funding official at BCP said it had been absent from the market because it had been undergoing a restructuring process, as a consequence of a capital injection it received from the Portuguese state in June 2012.

The capital injection was delivered in the form of state-subscribed CoCos. In February, BCP completed a Eu1.33bn rights issue, with which it repaid the remaining amount of the CoCos.

He added that BCP had also been successful in raising its fully loaded CET1 ratio above 11%, as it had targeted.

“After completing the restructuring plan, repaying the state, and getting these CET1 figures – and given the market conditions right now – we felt it was now the right time to return to the capital markets,” the funding official told The Covered Bond Report.

The deal is only BCP’s second benchmark offering in the capital markets since the bank was recapitalised by the government, following a Eu500m three year senior unsecured bond in February 2014.

BCP’s new issue is also only the second benchmark obrigações hipotecárias (OH) in 18 months, coming shortly after Banco Santander Totta reopened the Portuguese market with a Eu1bn seven year on 20 April and arriving into a market undersupplied in peripheral paper.

Following a roadshow, leads Mediobanca, Millennium BCP, Natixis, NatWest, Société Générale and UniCredit ultimately launched the five year obrigações hipotecárias (OH) with initial price thoughts of the 75bp area on Tuesday morning.

Guidance was later set at the 70bp area, before the spread was set at 65bp and the size at Eu1bn. The book closed at over Eu1.8bn.

“The deal went very well, and we achieved the pricing level that we were expecting,” he said. “If you consider that this is almost an inaugural transaction, we think we achieved a good balance in finding a price that was good for ourselves and for the investors.”

The deal was deemed to have offered only a slim new issue premium, while being priced around 55bp inside the Portuguese sovereign.

“The order book was also very granular, and the diversity of investors both in geography and investor type was very good,” added the funding official. “I think people are now looking with different eyes not only at BCP, but also at Portuguese risk.”

Fund managers were allocated 45% of the deal, central banks and official institutions 29%, banks 21%, and insurance companies and pension funds 5%. Accounts in Portugal took 36%, Germany and Austria 25%, Spain 10%, France 10%, the Benelux 7%, the UK 4%, Italy 3%, and Switzerland 3%.

The funding official added that BCP intends to be a more regular issue in the coming years.

“Without having a specific plan, our intention is to keep in contact with the market and to build a credit curve as quickly as possible,” he said. “Almost 50% of our loan portfolio is based on mortgage loans, so covered bonds will logically always be a very important funding tool for the bank.”