Lloyds Bank attracted some $1.3bn of demand to a three year Reg S covered bond today (Wednesday), allowing it to upsize its new issue to $1bn, as the UK issuer followed up on euro and sterling issuance this year with its second benchmark in the currency.

After the mandate was announced yesterday (Tuesday) afternoon, leads HSBC, Lloyds, Standard Chartered and TD went out with guidance of the mid-swaps plus 38bp area for a benchmark-sized three year Reg S trade. After almost two hours the leads reported books above $800m, and after around three and a half hours the pricing was fixed at 36bp on the back of some $1.1bn of demand, with the order book ultimately reaching $1.3bn, excluding joint lead manager interest, and the size being set at $1bn (EUR890m, £803m).

A banker at one of the leads said that the dollar transaction was launched by Lloyds taking into account three considerations: complementing euro and sterling covered bond issuance earlier this year; showing a commitment to the dollar market; and a need for OpCo funding.

The UK bank has sold two euro benchmarks this year, a EUR1.5bn five year in March that showed the market to be wide open for UK names, and a EUR1bn seven year last month, as well as £750m and £1.25bn three and five year Sonia-linked trades in January and May, respectively. Lloyds debuted in the dollar market in November 2018 with a $750m three year Reg S benchmark.

Lloyds’ newness in dollars was one reason the mandate was announced the day ahead of launch, according to the lead banker, with investors then having time to consider the prospective deal. And he noted that, with just its second dollar benchmark, Lloyds had managed to achieve a larger book than did MünchenerHyp yesterday (see separate article).

“We could therefore upsize it to $1bn,” he said.

“It is also a testament to UK plc as it enters an interesting period with the next round of Brexit.”

He put the new issue premium at 2bp, based on Lloyds previous, November 2021 dollar issue being trading at 31bp, mid, implying fair value of 34bp.

A syndicate banker away from the leads said the deal appeared to have gone very well.

“It’s interesting to see UK banks continuing to print while markets are open and given the way the rest of the year may pan out Brexit-wise,” he said.

“The guidance of 38bp was pretty generous – probably rightly so, since there may be some investors hesitant to get involved ahead of an illiquid summer and potentially volatile autumn.”

Bank and private banks were allocated 64%, central banks and official institutions 18%, asset managers 16%, and insurance companies 2%. The UK and Ireland took 47%, Germany and Switzerland 30%, the Nordics 14%, Asia-Pacific 6%, and other Europe 3%.