A debut, conditional pass-through (CPT) covered bond for NN Bank was priced flat to fair value and almost four times subscribed today (Wednesday), with the Eu500m seven year issue attracting investors in part due to an attractive pick-up over the outstandings of more established issuers.

The Dutch bank’s deal inaugurates a new Eu5bn conditional pass-through (CPT) covered bond programme that was established last month and has been assigned an expected AAA rating by S&P.

The Eu500m no-grow deal was launched this morning with guidance of the 4bp over mid-swaps area. After one hour, books had exceeded Eu1bn. Guidance was subsequently revised to the 1bp area, plus or minus 1bp will price within range, with the order book in excess of Eu1.5bn. The spread was ultimately set at flat, with the book closing at around Eu1.9bn pre-reconciliation.

ABN Amro, BNP Paribas, LBBW and Rabobank were leads.

“We were able to price the deal with no new issue premium and given the fact we had a book just shy of Eu2bn at the end, it is very fair to say that landing at mid-swaps flat was justified,” said a syndicate banker at one of the leads. “Also, there were almost zero dropouts in the book at this level, so it is a very good first result for the issuer.”

A banker away from the leads agreed.

“It is always interesting to see how investors behave in these CPT issuances, and clearly this one went very well,” he said.

Bankers said (Nationale-Nederlanden Bank’s) NN Bank’s deal was priced to flat to fair value, with CPT covered bonds issued by compatriot Aegon deemed the most appropriate comparables due to similarities between the issuers and their programmes. Aegon December 2020s were seen at minus 10bp, mid, and May 2023s at minus 3bp.

“There are a few reasons for this success,” said the lead syndicate banker. “Firstly, the strength of the issuer and the asset pool, and secondly the fact that the CPT product has been embraced by a bigger investor audience.

“But importantly, it offers an attractive pick-up versus some of the established Dutch issuers.”

Bankers noted that soft bullet covered bonds from ABN Amro, for example, trade deeply in negative territory, with its January 2024s seen at minus 15bp, mid, and January 2026s at minus 14bp.

The new issue followed a six day European roadshow that concluded on Monday, with the issuer announcing a mandate for the seven year issue yesterday (Tuesday) afternoon.

Prior to issuing covered bonds, NN Bank issued RMBS via its Hypenn programme. It also has a senior unsecured debt issuance programme.