Aegon exceeded expectations today when it attracted over Eu900m of orders to a Eu500m no-grow 10 year Dutch CPT benchmark, allowing for a new issue premium of just 1bp as demand flowed into even less favoured maturities on the back of the lack of supply.

After the mandate was announced yesterday (Monday) afternoon, leads HSBC, ING, NatWest, SG and UniCredit opened books this morning with guidance of the 15bp over mid-swaps area. After guidance was revised to the 13bp area, the deal was re-offered at 12bp over on the back of more than Eu900m of demand.

A syndicate official at one of the leads said that, pre-announcement, the issuer’s May 2023s had been quoted at 0.5bp, mid, and that the curve extension to 10 years was in the context of 10bp, putting fair value at around 11bp over – a figure he said chimed with feedback from some investors. He therefore put the new issue premium at around 1bp, also noting that the 4bp concession implied by initial guidance was less than on some recent issues, but explained by the Eu500m no-grow size.

Van Lanschot February 2027s, which he said were among comparables cited by some investors, were quoted at 13.5bp, bid.

A syndicate banker away from the leads said it was a “healthy transaction”, noting that demand for longer maturities recently had not been as convincing as for shorter maturities. The lead banker agreed, describing the 1bp new issue premium and demand as “a strong result”.

He suggested that the overall lack of supply was ensuring that even less favoured longer maturities were well bid.

“Investors are still chasing deals,” he said.

Today’s new issue is Aegon’s third covered bond benchmark, after it debuted with a Eu750m five year in November 2015 and issued a Eu500m seven year in May 2016. The last Dutch benchmark issuance was a debut covered bond for Rabobank, split into Eu1.5bn seven and Eu1bn 15 year tranches on 22 May.