Rabobank issued a dual tranche Eu2.5bn, seven and 15 year covered bond debut today (Monday), attracting combined orders of over Eu4.1bn, with the deal – featuring the tightest non-German seven year in over two years – deemed to have set it on the way to becoming the tightest Dutch name.

Rabobank’s covered bond debut has been awaited since the Dutch bank in December announced it had started the process of registering a covered bond programme.

After the issuer completed a roadshow last week, leads BNP Paribas, HSBC, LBBW and Rabobank this morning launched the seven year tranche with guidance of the mid-swaps minus 7bp area and the 14 year tranche with guidance of the 14bp area. After around one-and-a-half hours, they announced that combined books had exceeded Eu3bn, with demand slightly skewed to the seven year tranche.

Guidance for the seven year was later revised to minus 10bp plus or minus 1bp, will price within range, on the back of books over Eu2.3bn with around 100 accounts in. Guidance for the 15 year was revised to the 10bp area plus or minus 1bp, will price within range, on the back of books over Eu1.8bn with over 75 accounts in.

The spread of the seven year was then set at minus 11bp and the 15 year at 9bp, with their sizes later set at Eu1.5bn and Eu1bn, respectively.

“It’s a very impressive debut and a textbook execution,” said a syndicate banker away from the leads.

The deal is the largest in the euro covered bond market since 25 January, when Crédit Agricole sold a three tranche Eu2.5bn offering.

The seven year tranche is the tightest non-German benchmark euro covered bond with a maturity of seven years or longer since April 2015, when BNP Paribas Public Sector SCF priced a Eu750m 10 year issue at minus 11bp. The 15 year tranche is the tightest euro benchmark with a maturity of 15 years or longer from any jurisdiction since October, when fellow Dutch issuer de Volksbank priced a Eu500m 15 year at 9bp.

Bankers said the seven year tranche offered a new issue premium of at most 1bp, seeing ABN Amro January 2024s at around minus 13bp, mid.

“This is not exactly cheap, but given the quality of the Rabobank name, the absolute spread is reasonable and it’s probably where I would have put them,” said a syndicate banker away from the leads. “It is a well-judged price, reflecting the very strong interest that investors no doubt have for seven year, non-CPT Dutch paper at the moment.”

The 15 year tranche was deemed to have offered a new issue premium of around 2bp, with bankers citing ABN Amro January 2031s at around 7bp, mid. De Volksbank October 2031s were seen at around 13bp.

“Over time, you would expect Rabobank to be the tightest name in the Dutch market,” said a syndicate banker. “They’ve made a good start.”

Rabobank used to be triple-A rated, and is still the highest rated Dutch bank, currently Aa2/A+/AA-/AA (Moody’s/S&P/Fitch/DBRS). ABN Amro is rated A1/A/A+/A (high).