The cautious revival of the Italian covered bond market continued with a EUR500m five year issue for BPER today (Tuesday), with the issuer taking a defensive approach for its first trade in three years, pricing the deal in the middle of guidance and well wide of preceding longer supply.

Intesa Sanpaolo reopened the Italian covered bond market on Wednesday with a well received EUR1bn seven year issue that was the first Italian benchmark since January and since heightened political uncertainty hit Italian debt in May. However, compatriot Mediobanca was deemed to have struggled in printing a EUR500m six year deal the following day as its deal was only marginally oversubscribed, causing market participants to question the depth of demand for Italian issuers outside the top tier.

Bankers said today’s trade for BPER, which they said belonged to the second tier of Italian banks, provided further evidence of the difference in demand between Italian names, but showed that such issuers can nevertheless get deals done at a price.

“This is not an easy market and this is not an easy trade to sell, so it was probably a sensible approach to start where they did,” said a syndicate banker away from the leads.

BPER leads Commerzbank, NatWest, Nomura, UniCredit and UBS launched the EUR500m no-grow five year obbligazioni bancarie garantite with initial price thoughts of the mid-swaps plus 85bp area. The spread was ultimately set at 85bp with books closing at around EUR550m.

Intesa’s EUR1bn seven year issue last week was priced at 63bp over mid-swaps upon more than EUR1.5bn of demand, down from IPTs of the 70bp area, while Mediobanca’s EUR500m six year was priced at 70bp with books last reported at over EUR500m, down from IPTs of the low 70s area.

Bankers noted that demand for BPER’s trade was slightly higher than for Mediobanca’s, which they said was reflective of the more attractive pricing.

The new issue is BPER’s first benchmark OBG since July 2015, when it sold a EUR750m five year.

In February, BPER became the first covered bond issuer to disclose its cover pool data via EuropeanDataWarehouse to give itself “a wider window” when marketing its anticipated return to the market.