Raiffeisen Bank International AG (RBI) is set to launch its inaugural euro benchmark covered bond early next week, with its cover pool of predominantly commercial real estate loans and significant CEE share leading some market participants to suggest it could come at a premium to other Austrians.

Following the completion of a roadshow yesterday (Thursday), RBI’s leads announced that a seven to 10 year issue can be expected early next week. DZ, Mediobanca, RBI, SG and UniCredit have the mandate.

According to an RBI investor presentation, the cover pool volume was some €1.8bn at the end of September, of which 78% is originated by RBI itself and 22% pooled by Raiffeisen Landesbanks and local Raiffeisen Banks who are fellow members of Austria’s Raiffeisen Bankengruppe.

The cover pool mainly comprises real estate commercial loans (83.6%), the balance being Austrian residential mortgages. Although 47% of the CRE assets are Austrian and 14% German, the balance are from across central and eastern Europe, with Romania contributing 15%.

According to Maureen Schuller, head of financials research, ING, the cover pool’s exposure to non-double-A ceiling countries such as Romania, Bulgaria, Hungary and Croatia is one of the reasons – as well as obligor concentration risks – that RBI’s covered bond programme has a relatively high collateral score from Moody’s of 20.3%. The covered bonds have an expected rating of Aa1.

Pre-announcement comparables circulated by the leads put UniCredit Bank Austria 2026 to 2029 paper at 4bp-5bp over mid-swaps, Erste 2026 to 2029 paper in a range of 1bp-2.5bp over, and RLB Oberoesterreich and RLB NOe-Wien’s paper in between.

“A spread premium is expected based on the cover pool risks, which are slightly larger than for other Austrian programmes,” suggested Karsten Rühlmann, senior investment analyst, LBBW.

However, ING’s Schuller said she expects RBI’s status as Austria’s second largest systemically important institution to partially mitigate this.

A syndicate banker at one of the leads said the outcome could depend on whether investors focus more on the status of the issuer or the collateral.

“The way they choose to view it will of course determine their spread expectations,” he said. “We will hopefully be in a position to make the most out of it in the best interests of the issuer.

“More details will probably emerge from Monday onwards,” he added, “and we are optimistic we will get it out of the door in the course of the next week, subject to market conditions.”

He said the coming week is likely to be the last week for covered bond issuance before the market draws to a close for the holiday season.

Only two publicly-announced deals are in the pipeline. Crédit Agricole Home Loan SFH began a roadshow today for its first green covered bond, while NordLB Luxembourg Covered Bond Bank has already roadshowed what would be the first covered bond backed by renewable energy assets.