Crédit Agricole Italia (formerly Cariparma) could launch the longest ever peripheral benchmark tomorrow (Thursday) after today announcing plans for a dual-tranche OBG featuring eight and either 20 or 25 year tranches, in what could be the first deal from southern Europe of the year.

The issuer has mandated Crédit Agricole, LBBW, ING, Natixis, NatWest and UniCredit for the trade.

A syndicate banker away from the leads said that the mandate is a testament to the prevailing level of investor demand, adding that it will be a “must buy” given a combination of factors.

According to relative value considerations circulated by the leads around midday Europe today, fair value of 30bp for a 20 year and 34bp for a 25 year would imply yields of 0.82% and 0.90%, respectively, with a new issue premium of anything from flat to 10bp potentially taking the yield to the 1% level.

A syndicate banker at one of the leads said a decision would be taken tomorrow morning on the longer maturity. He said that investors do not a priori have a preference between the two maturities so far out on the curve, but are sensitive to yield bogeys and the direction of rates – particularly with president Donald Trump giving his reaction to Iranian retaliatory missile strikes in the morning in the US.

“The very long end of the curve is a point where you listen a bit more carefully to where investors see value,” said another lead banker, “and you have to become more flexible with regards to pricing.”

In the past four years CA Italia has issued tranches of €500m to €750m, although sometimes up to €1.5bn in dual-tranche transactions. The first lead banker said the flexibility to weight the new issuance towards either the 20/25 year or the shorter dated tranche – which he noted would be relatively straightforward – would help the issuer optimise the outcome.

CA Italia’s last euro benchmark was a €750m eight year in March 2019. According to pre-announcement comparables circulated by the leads, this March 2027 paper was quoted at mid-swaps plus 24bp, mid, while its March 2029s were at 24bp, September 2031s at 23bp, and January 2038s at 24bp.

According to various market sources, the previous longest-dated peripheral benchmark euro covered bond issuance has been 20 years, while syndicate bankers struggled to recall euro benchmark issuance longer than 20 years from an issuer in any country.