ABN Amro extended very long-dated covered bond activity beyond Germany today (Monday) and achieved a much stronger outcome for a EUR750m 20 year deal than a EUR750m 15 year in January, as the new issue attracted some EUR1.9bn of demand.

Last week DZ Hyp on Tuesday and then MünchenerHyp on Thursday launched EUR500m 15 and 20 year Pfandbriefe, respectively, that attracted EUR2.4bn and EUR3bn of orders, allowing for pricing flat to inside fair value.

With Dutch issuers having historically been among the most active beyond 10 years – reflecting most borrowers in the Netherlands fixing their mortgage rates for longer than 15 years – Dutch issuers had been named as candidates to tap into investors’ strong demand for long-dated covered bonds, and ABN Amro duly delivered this morning.

“Whenever there is a market that has proven to be that supportive for the ultra-long part, it is something that is a good opportunity to take advantage of for an issuer like ABN,” said a banker today.

Leads ABN Amro, BayernLB, Credit Suisse, DZ and LBBW went out with initial guidance of the mid-swaps plus 15bp area for the 20 year euro benchmark. An hour later they reported books above EUR1bn, excluding joint lead manager interest, and 40 minutes later revised guidance to 12bp+/-1bp, WPIR, on the back of books above EUR1.6bn, excluding JLM interest. The final book pre-reconciliation was reported at above EUR1.9bn and more than EUR1.8bn of orders were good at re-offer according to a syndicate banker at one of the leads.

“If fair value is at 10bp and you can print at 11bp and make sure that you keep everybody in, it’s the kind of trade you want to do,” he said. “Could we have done this at 10bp? Maybe. But this reflects the way the issuer wants to manage its investor base.”

The leads put fair value at 9.5bp-10bp over mid-swaps, with ABN Amro January 2037 and April 2038 issues quoted at 9bp, mid, on an i-spread basis, according to pre-announcement comparables circulated by the leads.

The size of the new issue was confirmed at EUR750m at the time guidance was revised, although the lead banker said this was the maximum size the issuer had indicated was being sought from the outset.

He contrasted the outcome of the deal with the EUR750m 1.375% 15 year ABN Amro priced on 3 January, which was priced in the middle of guidance of the 26bp area on the back of books above EUR800m.

“It’s fair to say that they struggled a bit in the 15 year in early January,” he said. “It shows how market can change in a short time.”

The lead banker said the Dutch 20 year played into the same trends spurring long-dated buying as did the two German benchmarks last week, although he noted that ABN Amro could offer a 0.125% higher coupon than MünchenerHyp’s 1% thanks to a back-up in rates on Friday.

“And given also the 12bp starting point of MünchenerHyp and the proven appetite for such paper, we knew that this would appeal to a good number of investors,” he added.

He said that, as in the Pfandbriefe, bank treasuries were prominent in the order books, although he noted that a “good number” of asset managers and pension funds contributed to a quality order book.

ABN Amro’s deal was the only benchmark covered bond in the market today, which one banker said was surprising after the success of last week’s issuance.

“But I’m hearing there is more long-dated supply in line for tomorrow and Wednesday,” he added, “and then it’s Easter and we can all have a break.”