Achmea stunned bankers by attracting over €2.8bn of orders to a €500m conditional pass-through covered bond today (Tuesday), the largest ever book for a CPT, according to a lead, with the strength of demand – achieved at a minimal NIP – attributed to investors ploughing money into the credit markets.

After announcing the mandate yesterday (Monday) afternoon, leads ABN Amro, DZ, ING, Rabobank, SG and UniCredit went out with guidance of the mid-swaps plus 30bp area for the €500m no-grow five year CPT issue. After around 35 minutes, books were reported as being over €1bn, excluding JLM interest, and after around two hours, guidance was revised to 25bp+/-1bp, WPIR, on the back of over €2bn of demand, excluding €80m joint lead manager interest. The spread was ultimately fixed at 24bp on the back of over €2.8bn demand, excluding JLM interest.

The last legislative CPT covered bond was a €500m no-grow 10 year from NIBC in October 2019, although Deutsche Bank issued a €500m structured CPT covered bond in November 2019.

A syndicate banker away from the leads said the order book testified to the strength of the covered bond market.

“It’s absolutely massive for an Achmea CPT security,” he said. “People clearly have plenty of liquidity and anything that remotely looks like a covered bond is going to go extremely well.

“If anything, seeing that kind of size for this deal makes me nervous about how big order books will be for either more run of the mill deals that come along, or when everyone is cashed up from the TLTRO draw-down, when I expect there to be even larger volumes available for issuers. So it’s a very bullish signal indeed.”

A syndicate banker at one of the leads said the level of demand spoke for itself, representing the largest ever book for a CPT.

“CPTs have never truly been warmed to by the investor community,” he said, “and I always thought that Achmea, amongst those that were doing CPTs, was one of the more challenging names,” he said. “However, this time they have got it spot on and fast-laned everyone out there. It was just perfect timing.”

Achmea’s last euro benchmark, a €500m no-grow seven year in February 2019, attracted less than €600m of orders. Compatriot NN Bank recently announced plans to issue soft bullets instead of CPTs in light of growing funding needs.

While the orderbook is exceptional for a CPT, it also reflects a broader trend of heavy demand for covered bonds, according to the lead banker, who said investors cannot afford to be picky.

“You don’t have the choice,” he said, “as you could find yourself with no bonds and getting questioned by your boss why you missed out, so you have to follow, and this is what most are doing these days. You either play the game or you don’t.”

He put fair value at 23bp, based on Achmea’s outstanding November 2024 and February 2026 paper at 22bp and 24bp, respectively.

“June 2025 fits in nicely,” he added, “so there’s approximately 1bp of new issue premium.”

The syndicate banker away from the leads, however, said that based on where he saw the comparables today, the new issue came flat to fair value.

Another syndicate banker away from the leads noted Achmea offered a significant pick-up versus non-CPT Dutch paper, with CPTs not being eligible for CBPP3 and having underperformed since the start of the coronavirus pandemic.

“In that sense, it’s pretty attractive,” he said.

According to pre-announcement comparables circulated by the leads yesterday, ABN Amro January 2024s and January 2026s were quoted at 6bp and 4bp, respectively, and de Volksbank January 2026s at 11bp.

The syndicate banker said he was not surprised to see the size of the orderbook following the success of a €500m no-grow seven year from NordLB Luxembourg Covered Bond Bank last week, which was also ineligible for Eurosystem buying.

“The covered bond market is in very good shape and it obviously offers more in terms of spread,” he said, “so I wasn’t shocked. Investors are looking for something that gives a little extra, given how much things have rallied, so it was a very strong result.”

A public holiday in parts of Europe will largely close the market on Thursday, meaning any remaining issuance this week will come tomorrow (Wednesday).