Raiffeisenlandesbank Vorarlberg sold a debut EUR500m covered bond today (Monday) that was deemed the strongest Austrian deal in months, benefiting from less aggressive pricing and extensive investor work. Santander UK is due with a dual tranche, sterling and euro issue.

Raiffeisenlandesbank Vorarlberg leads DZ, Erste, LBBW and RBI launched the EUR500m no-grow mortgage-backed issue with guidance of the 7bp over mid-swaps area. Around 30 minutes later, the leads announced that books had surpassed EUR500m, excluding joint lead manager interest.

Guidance was subsequently revised to the 5bp area, plus or minus 1bp will price in range, with books over EUR800m, including EUR70m JLM interest. The spread was then set at minus 4bp with books above EUR900m, including EUR70m JLM interest.

“It went very well,” said a syndicate banker at one of the leads. “The most interesting thing for me is that we saw four Austrian deals in a row and all of them heavily depended on the central bank, with order books that were not very highly subscribed, and were all priced very tight.

“Today’s was the first that was a bit different in that we saw a really strong order book, with almost EUR1bn of orders, and it was very granular with international accounts in there, too.”

Raiffeisenlandesbank Vorarlberg’s deal follows EUR500m covered bond offerings from compatriots Raiffeisenlandesbank Oberösterreich, Hypo Vorarlberg, RLB NÖ-Wien and Hypo Noe, which came either side of the summer break and all attracted demand of EUR600m-EUR680m. The new issue’s book is the largest for an Austrian covered bond since June, when Erste attracted more than EUR1bn of orders to a EUR750m deal.

A banker away from the leads noted that none of the prior four deals were priced more than 2bp inside initial guidance. He added that today’s deal’s inaugural nature also likely boosted demand and supported the spread move.

The lead syndicate banker attributed the deal’s success to its new issue premium – which he said was in line with recent covered bond issues over the last two weeks but larger than those paid by the last Austrian deals – as well as the lack of competing supply in the market today, and the issuer’s extensive marketing efforts – the bank on Thursday completed a European roadshow where it met over 40 accounts.

Bankers said the deal paid a new issue premium of around 3bp-4bp, seeing RLB NÖ-Wien March 2025s at minus 3bp and August 2026s at plus 3bp, and Raiffeisenlandesbank Oberösterreich September 2026s at plus 1bp.

Santander UK announced a mandate this afternoon for a dual tranche covered bond issue comprising an inaugural SONIA-linked sterling-denominated three year benchmark and a five year euro benchmark, which is expected to be launched tomorrow (Tuesday).

Deutsche, NatWest, RBC, Santander and TD will lead manage the sterling tranche, and HSBC, LBBW, Natixis, Santander and UBS the euro.

Lloyds Bank printed the first SONIA-linked covered bond on Wednesday, a £750m three year issue priced at 43bp over the benchmark.