OCBC issued a “smooth” EUR500m five year covered bond today (Thursday), taking over EUR800m of orders at the tightest Singaporean spread in euros, after compatriot UOB showed the pricing benefits of sterling. De Volksbank is set to roadshow a EUR500m 10 year issue.

Following a mandate announcement yesterday (Wednesday) afternoon, Oversea Chinese Banking Corporation (OCBC) leads Barclays, BNP Paribas, NordLB, OCBC and UniCredit launched the Reg S issue with guidance of the 1bp over mid-swaps area this morning.

The leads later announced that the book had exceeded EUR750m. The spread was then fixed at minus 2bp with the books above EUR800m.

The spread is the tightest ever for a euro benchmark covered bond from Singapore, surpassing the minus 1bp level achieved by a Eu500m seven year for DBS Bank in November, albeit in a shorter maturity.

“It was a smooth trade and in the end they secured a very attractive spread for the issuer,” said a syndicate banker away from the leads.

Bankers away from the deal said the size of the book represented a good result for a relatively new issuer from a jurisdiction that is still growing its investor base. The new issue is OCBC’s third euro benchmark covered bond, after two EUR500m deals last year.

“It could have been challenging for them to get below mid-swaps,” added a syndicate banker away from the leads. “Usually a 3bp move would be straightforward for a deal of this nature, but those basis points become a lot stickier if you’re trying to go from a positive number to a negative number.”

The final spread was seen as incorporating a new issue premium of 2bp-3bp, with bankers seeing OCBC October 2022s at around minus 5bp, mid.

Bankers said the issuer and its leads followed a strategy similar to that used by Nordea Mortgage Bank and BPCE to attract yesterday, with both having offered slightly more generous premiums at the start of the execution process than had been seen in previous trades, which met with more limited demand. The initial guidance of OCBC’s deal was deemed to have offered a premium of 5bp-6bp.

United Overseas Bank (UOB), OCBC’s compatriot, sold an inaugural £350m five year FRN covered bond yesterday. The deal, which was the first public sterling covered bond issuance from Asia, was priced at 24bp over three month Libor.

Bankers away from the leads estimated that the spread of 24bp over three month Libor offered a saving of around 5bp versus the spread UOB would have been able to achieve with an equivalent US dollar issue and around 7bp versus the spread of OCBC’s EUR500m five year today.

The deal was priced at the same spread as a EUR500m five year FRN for Westpac on 11 January.

“That underscores the stability of the sterling market, given all the volatility that there’s been in between those two deals,” said a syndicate banker away from the leads, “and for a Singapore bank to manage to price a debut deal at the same level as a pretty well established Australian shows the market is even more open to international issuers than it has been in the past.”

He added that Singaporean banks’ relatively lower funding needs than some other international issuers could be an advantage in the sterling market.

“It’s also worth noting that Singaporean banks don’t have enormous levels of mortgage collateral, and therefore have the ability to optimise their funding at pretty tight levels without the need to print in enormous size, and that’s appealing for the sterling market,” he said. “If you just want to print £200m or £300m or so, that’s much more straightforward to do than trying to print a EUR500m or EUR750m deal.”

De Volksbank announced this afternoon that is has mandated Barclays, Credit Suisse, LBBW and Rabobank to arrange a European roadshow ahead of a potential EUR500m no-grow 10 year covered bond. The roadshow will start on Monday and is expected to end on Tuesday.

The Dutch issuer’s last benchmark covered bond was a EUR500m 10 year last May. NIBC and Rabobank have both sold 10 year euro benchmarks this year. NIBC’s EUR500m issue was priced at 5bp on 16 January, and was seen at around 6bp, mid, today, and Rabobank’s EUR1.25bn issue was priced at minus 10bp on 30 January, and seen at around re-offer.