Andbank achieved its goal of diversifying its investor base with a debut Eu100m covered bond yesterday (Tuesday), according to an official at the issuer, and will follow up with one or more trades, potentially private placements, to mop up demand from accounts that were unable to participate.

Lead JP Morgan launched the five year FRN yesterday morning with initial price thoughts of the three month Euribor plus 100bp area for a minimum size of Eu75m. The spread was later set at 100bp, with the minimum size increased to Eu100m, before the size was set at Eu100m, with the book closing at over Eu100m.

“It is a positive outcome for us,” said Paco Collell, director of the financial institutions group at Andbank. “The idea was to get access to different markets and become known in places where until now, very few people knew about Andbank or Andorra.”

Collell said that around 10 investors participated in the deal, including accounts from Spain, Germany, the Nordics and France.

“In terms of the size, we could have done a little bit less or a little bit more,” he added. “But we decided to print Eu100m and still have some room left to print something more in September if the opportunity arises.”

Collell said some investors that were not in the book had expressed serious interest in the deal but had been unable to take part, in particular accounts in northern Europe, where many market participants are now on holiday.

“As we are in mid-July, some accounts had problems finalising the credit process in time to be able to participate in the deal,” he said. “We therefore decided to leave some room in our portfolio to do one or two transactions, which could be private placements, after the summer.”

Andbank first announced its plans to issue a debut sub-benchmark mortgage covered bond on 28 June, having set up a new Eu500m programme. It held a European roadshow the following week with lead manager and programme arranger JP Morgan.

Collell said the issuer decided to issue a floating rate note, rather than a fixed rate deal, and chose the five year maturity in response to investor feedback. He added that the price discovery process was particularly challenging.

“To be honest, at very beginning we did not know exactly the level at which we could issue,” he said. “We had no clear comparables, but we had a range where we felt comfortable, and in the end we are happy with the final result.”

The covered bond is the first public deal in wholesale markets from an Andorran bank. Andbank previously funded itself through privately placed senior unsecured notes and has via an EMTN programme placed deals within its network and client base.