Spain’s Abanca was able to set down a EUR750m 10 year marker with its first benchmark covered bond today (Thursday), even if its execution was less frenzied than recent core and no-grow deals. ING-DiBa meanwhile attracted a strong bid for an eight year despite pushing pricing through mid-swaps.

Leads Crédit Agricole, Commerzbank, NatWest and Santander went out with guidance of the 40bp over mid-swaps area for Abanca’s 10 year benchmark, and after an interim update noting demand was well above EUR500m, set the spread at 38bp on the back of a book above EUR850m. The size was set at EUR750m and the final book was above EUR850m.

A syndicate banker at one of the leads acknowledged the 10 year maturity was not an obvious one for an inaugural peripheral trade, but said that interest from investors during the roadshow gave them comfort that the deal would work well.

“The fact is, yes, it is a bit ambitious, but it makes sense given the bid for duration and the lack of supply on the cédulas side,” he said.

Abanca’s Aa2/AA debut is only the third Spanish euro benchmark covered bond this year, following a EUR500m six year from Deutsche Bank SAE in January and a EUR1.5bn 12 year from Santander on 30 April.

“It gives an extra bit of yield and an extra bit of spread for investors, while the issuer is happy to get the duration,” added the lead banker, “so it worked well all round.”

The Spanish issuer launched its debut after a roadshow earlier this week and was able to find sufficient demand despite broader market conditions having deteriorated since it announced its mandate a week ahead of the roadshow.

“It has been good to see that the market is still very receptive to covered bonds,” said the lead banker.

Given the inaugural nature of the trade and longer maturity, pin-pointing fair value was very difficult, he said, and no consensus level was given by the leads. Comparables at the wider end of the cédulas market included Bankia 2025s at 26bp over, Caja Rural de Navarra 2025s at 24bp and Sabadell 2027s at 25bp, while BankInter 2028s were at 20bp. The pricing of 38bp over was 12bp through 10 year Spanish government bonds.

ING-DiBa’s dual-tranche, eight and 20 year mortgage Pfandbrief was more in line with recent trades, in the choice of maturities, core nature of the trade, and reception, even if demand was more modest than on some recent, particularly EUR500m no-grow issues.

Leads Commerzbank, ING, LBBW, Santander, SG and UnICredit went out with initial guidance of the 3bp and 11bp over mid-swaps area for the eight and 20 year tranches, respectively. The size of both the eight and 20 year were set at EUR750m, with pricing on the shorter tranche was tightened 5bp to minus 2bp on the back of some EUR1.7bn of demand, while the longer tranche was tightened 3bp to 8bp on the back of some EUR1.35bn of orders.

The EUR750m eight year tranche is the first euro benchmark of the year to be priced inside mid-swaps, following the retightening of the market since the start of the year – on 3 January LBBW sold a EUR750m seven year at 5bp over mid-swaps.

In spite of this, the deal was very well received, said bankers.

“The order book proves this,” said a syndicate official away from the leads, “and the fact they did only EUR750m helped them tighten to as much as minus 2bp. We saw a few tickets trade at re-offer plus a few cents, so in the end it was well placed and a very good trade.”

He suggested the 1% coupon and 1%-plus yield achieved on the 20 year tranche was key to interest in the longer trade.