Andbank (Andorra Banc Agricol Reig) launched the first Andorran covered bond today (Tuesday), a five year floating rate structured covered bond that will be priced at 100bp over three month Euribor and will have a size of at least Eu100m.

Andbank on 28 June announced its plans to issue a debut sub-benchmark mortgage covered bond out of a newly established Eu500m programme, holding a European roadshow the following week with lead manager and programme arranger JP Morgan.

JP Morgan launched the five year FRN this 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.

The final size of the deal was not set when The CBR went to press.

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

Andorra does not have covered bond legislation and, as such, the deal is a structured covered bond. It was issued out of Andbank’s Netherlands branch, Andorra Capital Agricol Reig BV, with a guarantee from the parent in Andorra and with a second recourse from an SPV based in Ireland. The bankruptcy-remote SPV received cover assets originated by Andbank in Andorra via a true sale.

Andbank is rated BBB (stable) by Fitch and its covered bonds are expected to be rated BBB+ by the rating agency. Andorra is rated BBB (positive).