A EUR500m no-grow five year NN Bank deal today (Wednesday) offered reassurance that CPT covered bonds have not been hurt by the ECB’s latest discrimination against the product by achieving a comparably successful result to non-CPT supply, unlike Achmea last week.

The European Central Bank has long expressed concerns about conditional pass-through (CPT) structures holding “additional risks” and in December said that all CPT covered bonds would be excluded from reinvestments of APP redemptions, contrary to its stance during CBPP3.

When Achmea last Wednesday launched the first CPT benchmark that would have been eligible or CBPP3 but is excluded from APP reinvestments, a EUR500m no-grow seven year, it attracted only around EUR590m of orders and pricing was tightened only 1bp during execution, meaning the Dutch issuer paid a new issue premium of 4bp-5bp – a result out of line with the bulk of non-CPT supply achieving multiple times oversubscribed books and paying slim to negative NIPS. Although market participants expressed puzzlement at why Achmea’s deal had not fared better, it raised the possibility that the ECB’s move was having an unexpectedly negative impact on new CPT issues.

However, Nationale-Nederlanden Bank (NN Bank) could today tighten pricing 4bp from initial guidance to end up paying a new issue premium of just 1bp on the back of EUR1.25bn of orders good at re-offer.

Leads ABN Amro, HSBC, ING, LBBW and Natixis initially went out with guidance of the 20bp area for the EUR500m no-grow five year Dutch CPT issue and gave an update that books were above EUR600m in less than an hour. After a little under two hours guidance was revised to 17bp+/-1bp, WPIR, on the back of more than EUR1bn of demand, and EUR1.25bn of orders were good at re-offer when the price was set at 16bp over.

A lead syndicate banker said the year maturity and optically attractive pricing helped. He said the five year maturity encompasses a wider range of accounts than Achmea’s seven year, with this being particularly important when some investors are unwilling to participate in CPTs, and also being a slightly more conservative tenor.

He said the 20bp over mid-swaps starting point was attractive to investors versus Achmea’s 19bp for a two year shorter trade, and a banker away from the leads agreed with this, even if it simply reflected the normal differential between the two names.

“We are very, very pleased with the outcome,” said the lead syndicate banker. “16bp was seen as ambitious at the start.”

He said that only around EUR100m of orders dropped when the pricing was fixed at 16bp, which he said incorporated a new issue premium of 1bp.

“It is no longer CBPP3-eligble,” he added, “but it is still OK for bank treasuries for LCRs, and ECB repo-eligible. And the ECB doesn’t make a huge difference in the primary market anymore.”

UniCredit Bank AG (HVB) also improved on a previous result today, attracting over EUR800m of demand, including EUR100m joint lead manager interest, to a EUR500m tap of a EUR500m 10 year deal that only generated above EUR600m of demand when initially launched at the beginning of January. It was also able to price the new issue at a tighter level, at 11bp over mid-swaps versus 15bp.

Leads BayernLB, Deutsche, Helaba, NatWest and UniCredit went out with guidance of mid-swaps plus 12bp+/-1bp, WPIR, for a EUR250m minimum tap this morning. A lead syndicate banker said the 11bp re-offer spread incorporated a new issue premium of 1bp.