Pricing on a EUR750m 10 year Crédit Agricole Public Sector SCF benchmark was tightened as much as 6bp from initial price thoughts to re-offer and the deal was sized at the upper end of its planned range on the back of more than EUR2.5bn of demand today (Thursday).

Leads ABN Amro, Crédit Agricole, DZ and Handelsbanken went out with IPTs of the mid-swaps plus 19bp area for the EUR500m-EUR750m 10 year trade for Crédit Agricole’s issuer of public sector covered bonds.

Orders were above EUR2bn after around an hour and 10 minutes, with some 80 accounts participating, and guidance was revised to the mid-swaps plus 15bp area. After a total of around two hours the spread was fixed at 13bp and the size at EUR750m on the back of more than EUR2.5bn of demand and some 120 accounts participating.

The 6bp move from the middle of IPTs to re-offer is larger than even the 5bp moves that have been seen on the biggest blow-outs from core issuers this year and a syndicate banker at one of the leads acknowledged that it was an unusually large move.

“But we felt that given the quality of some chunky orders we could squeeze 1bp further and ease the allocation process,” he said. “There was some resistance here and there, but we were happy to deal with that.”

The lead banker said the deal offered a new issue premium of 1bp. Crédit Agricole Public Sector SCF August 2027s were quoted at an i-spread of 9.5bp, pre-announcement, and Crédit Agricole Home Loan SFH August 2028s at 8.5bp and January 2029s at 9bp, according to comparables circulated by the leads.

The issuer was the latest among a recent handful to eschew either the typical “EUR500m no-grow” or “euro benchmark” starting language, opting for a “EUR500m-EUR750m” range.

“We know the market is offering some flexibility around pricing and size,” said the lead banker, “and the important thing is to guide people properly. From the investors’ perspective, this is better than ‘benchmark’, where it could end up at EUR1bn or even EUR1.25bn.”

Crédit Agricole more frequently issues covered bonds out of its Home Loan SFH, but the lead banker said the French bank was keen to take advantage of the bullish market conditions to raise funding via its slightly less familiar entity, having already issued Additional Tier 1, senior non-preferred and Tier 2 in markets very accommodating of high beta product thus far this year, and leave SFH issuance until conditions are less favourable.

“It’s a very strong market,” he said, “particularly after the confirmation overnight that the Fed that its dovish stance is here to stay.”