Hypo Landesbank Vorarlberg sold a Eu500m seven year Pfandbrief today (Wednesday) that was twice subscribed despite being priced flat to its curve, as the relatively rare issuer benefited from changed perspectives on Austrian covered bonds and an attractive pick-up over comparable German paper.

After announcing a mandate yesterday (Tuesday), Vorarlberger Landes- und Hypothekenbank (Hypo Landesbank Vorarlberg) leads Barclays, BayernLB, Erste, RBI and UniCredit launched the Eu500m no-grow mortgage Pfandbrief with guidance of the 7bp over mid-swaps area this morning.

Guidance was then revised to the 4bp area, before the spread was fixed at 2bp on the back of Eu1bn of orders.

“It was a nice, smooth trade that went well and quickly,” said a syndicate banker away from the leads. “For a rare name, and in contrast to today’s other supply, it is a good result.”

Hypo Landesbank Vorarlberg sold its inaugural benchmark covered bond in April 2013, a Eu600m seven year mortgage Pfandbrief, although it also has a Eu500m February 2025 issue outstanding, having increased the deal, then a Eu300m 10 year, to benchmark size in November 2015.

The new issue was deemed to have been priced flat to or even slightly inside the issuer’s curve, with bankers citing the February 2025s quoted at around 3bp, mid. They also noted that a recent Eu500m six year for fellow Austrian issuer Hypo Noe, which was priced at 5bp on 28 March, was quoted at around 1bp, mid, this morning.

Bankers said demand for the new issue would have been boosted by the relative attractiveness of Austrian spreads versus German comparables.

“Austrians are selling very well at the moment,” said one. “Since the resolution of the Heta saga, I think some people have started to see Austria as being more like Germany with a pick-up.

“If you consider a deal from a comparable Germany issuer would have been priced at around minus 10bp, you can understand why this probably attracted big bids from Germany.”