Mediobanca attracted some Eu1.7bn of demand to a Eu750m 12 year OBG today (Friday), its first benchmark covered bond in two years, finding sufficient demand to print a larger size than the Eu500m favoured by most issuers this week, with the deal boosted by limited peripheral supply.

The new issue is the first benchmark covered bond from Italy since 25 September, when UBI Banca priced a Eu1.25bn 10 year. Including Mediobanca’s deal, year-to-date benchmark Italian covered bond supply stands at Eu5bn for 2017, down from Eu6.5bn over the same period in 2016.

Mediobanca’s last benchmark OBG came in November 2015, when it sold a Eu500m 10 year.

Leads Crédit Agricole, Mediobanca, Natixis, Santander and UniCredit launched the deal with guidance of the 33bp over mid-swaps area this morning. Guidance was later revised to the 30bp area, plus or minus 3bp, and the size set at Eu750m with books at Eu1.4bn, including Eu120m joint lead manager interest. The spread was ultimately fixed at 27bp, with the book closing at Eu1.7bn, including Eu120m JLM interest.

“The most notable thing about the deal is that the demand and the size that they were able to take out of the market are larger than most of this week’s trades,” said a syndicate banker away from the leads. “As November has gone on and the market has maybe calmed down a little, issuers have mostly been taking out smaller sizes, but Mediobanca here were able to get to Eu750m.”

Of this week’s seven euro benchmark covered bonds, only two were not Eu500m issues – Mediobanca’s trade and a Eu1bn issue for OP Mortgage Bank on Wednesday.

“No doubt they were helped by the rarity of the name and lack of peripheral supply, and a positive double digit-spread is quite hard to find right now.”

Excluding Greek issues, the deal is the widest euro benchmark covered bond since 9 October, when Portugal’s Montepio priced a Eu750m five year OH at 65bp.

However, the deal is the tightest new benchmark OBG since October 2016, when Cariparma priced a Eu750m eight year issue at 21bp, and is understood to be the tightest Italian post-crisis with a maturity of 12 years or longer.

“It’s a great price, when you consider where peripheral trades were landing just months ago,” said another syndicate banker.

The final spread was seen as incorporating a new issue premium of around 3bp, with bankers seeing Cariparma March 2029s – the last 12 year benchmark OBG, having been priced at 65bp in March – at 19bp-20bp, mid, and noting that Mediobanca trades slightly wider than Cariparma across the curve.