Rabobank is set to issue a debut euro benchmark covered bond in the latter half of this month, having today (Thursday) announced a roadshow, and is open to launching a dual tranche transaction, according to its funding officials – an approach bankers said is novel for a debut.

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 with the Dutch central bank (DNB).

Rabobank this morning announced it has mandated BNP Paribas, HSBC, LBBW and Rabobank to arrange a European roadshow commencing on Monday ahead of a potential euro benchmark covered bond issue with an intermediate and/or longer maturity.

“The main aim of the roadshow will be to introduce and explain our newly established covered bond programme,” Sjaak-Jan Baars, head of long term funding at Rabobank, told The CBR. “Furthermore, we like to give investors that are new to us the opportunity to get to know Rabobank and to be able to ask questions directly.”

Rabobank’s covered bonds are expected to be rated Aaa by Moody’s. The issuer is rated Aa2/A+/AA-/AA at Moody’s, S&P, Fitch and DBRS, and is the highest rated Dutch bank.

The roadshow is expected to conclude on Friday of next week (19 May) and is set to visit the Netherlands, Germany, Vienna, Helsinki, Copenhagen, Oslo, Dublin, London, Paris and Luxembourg. A syndicate banker at one of the leads said the deal is likely to emerge the following week.

Bankers speculated that the phrasing of the mandate implied the issuer would be launching a dual tranche transaction.

“We haven’t decided on the actual tranching, but the announcement leaves room for a single or dual tranche approach depending on investor feedback and appetite,” said Fadi Yakoub, funding manager at Rabobank. “We have structured this announcement very carefully in order to give investors the opportunity to indicate where their preferences are.”

Bankers away from the deal noted it was unusual for an inaugural issuer to come to the market with a dual tranche offering, and to make their first entry in the long end.

“It’s an interesting strategy,” said one. “It’s not a surprise that they’re looking at the long end, as that is where Dutch banks often issue covered bonds, but it is a surprise in the sense that most first-time issuers feel like they’re already going to end up paying some kind of debut concession.

“Therefore they might usually be minded to limit that by going for something relatively short-dated and straightforward, rather than injecting some additional duration premium. Most debutants would tend to print a five year first, then come back and print a seven or 10 year at around the same level.”

Dutch covered bond supply has been limited this year, with only three benchmarks to date. The last came yesterday (Wednesday), a Eu500m 10 year issue for de Volksbank that was deemed to have struggled after attracting orders of just Eu585m.

Syndicate bankers away from the deals said that for Rabobank there were few takeaways from de Volksbank’s trade, however, suggesting demand was limited because the price was overly ambitious, adding that Rabobank is likely to find stronger demand given the issuer’s higher ratings.

Rabobank will become the last of the big four Dutch banks to issue covered bonds, joining fellow D-SIBs ING Bank, ABN Amro, and de Volksbank (formerly SNS Bank), which, like the smaller NIBC Bank, have been active in the market for some years. The last new entrants in the market were F van Lanschot Bankiers and Aegon Bank, which made their debuts in 2015.

Rabobank has joined the Covered Bond Label, the Covered Bond Label Foundation announced this morning, with the bank becoming the 90th issuer on board the ECBC-led initiative.