A Eu1bn 15 year covered bond for Nationwide today (Thursday) was considered an exceptional result for the issuer – in terms of a slim premium despite political noise and just months after it held off a mooted 15 year – but not such a good experience for investors, after the spread was tightened 10bp.

The UK issuer in February launched a seven year covered bond and also announced that it was considering a 15 year tranche in response to reverse enquires. It ultimately printed a Eu1bn seven year deal while a 15 year did not emerge, the issuer deciding against the tranche because its pricing expectations did not match those of investors, according to bankers close to the deal.

Today, Nationwide Building Society leads Barclays, Citi, Nomura and Société Générale launched a new 15 year issue with guidance of the 40bp over mid-swaps area. Guidance was then revised to the 33bp area for an expected size of Eu750m, with books over Eu2.5bn, before the size was set at Eu1bn and the spread at 30bp, with books over Eu3bn.

“It was a very good response,” said a syndicate banker at one of the leads. “Particularly given the noise around the UK, to be able to print such a long maturity with such a small new issue premium is a very strong result.”

The deal is the first benchmark covered bond from the UK since the country’s general election on 8 June, with the implications for the government’s approach to Brexit still being digested.

The lead syndicate banker said the deal offered a concession of around 2bp, with Nationwide March 2027s at 15bp, mid, pre-announcement and taking into account the curves of other issuers that have 15 year benchmarks outstanding. He noted, for example, that Crédit Agricole has May 2027s quoted at around flat and February 2032s at around 15bp, whereas Caffil has January 2027s at 3bp and May 2032s at 17bp.

Bankers away from the leads said, however, that the 10bp move from initial guidance to re-offer was a significant leap, and suggested investors may also have been disgruntled by the decision to increase the deal’s size from the Eu750m indicated mid-execution.

“It’s an exceptional outcome for the issuer,” said one. “But I’m not sure that investors will be so pleased.”

The lead syndicate banker noted that some accounts dropped out of the book after the spread was fixed at 30bp, but said the move from guidance to re-offer was justified by the strength of the order book.

“Spread levels also matter here,” he said. “We’re not talking about a Pfandbrief at minus 5bp or something like that. At higher spread levels, capacity to move is certainly higher than it would be in a more typical seven or 10 year covered bond.”

He added that the issuer’s decision to revisit its 15 year plans made sense as the appetite for such long dated paper is higher than in February.

“Is this a better time to do a deal from a UK point of view? Arguably not,” he said. “But there is a stronger bid for duration than there was at the time.”

The new issue is the longest dated benchmark covered bond from the UK in three years, since Nationwide printed a Eu750m 15 year as part of a dual tranche issue in June 2014.