Sumitomo Mitsui Banking Corporation (SMBC) today (Thursday) attracted around €1.8bn of orders to its fourth euro benchmark covered bond, a €1bn five year deal that bankers said marks a positive development for the Japanese bank in expanding the investor base for its contractual issuance.

After announcing the mandate on Tuesday and holding a virtual roadshow, leads Goldman Sachs, SMBC Nikko, Barclays, Crédit Agricole and UBS this morning went out with guidance of the mid-swaps plus 28bp area for a five year euro benchmark-sized covered bond. The size was ultimately set at €1bn and the deal priced at 24bp on the back of around €1.8bn of demand.

The new issue is SMBC’s fourth euro benchmark since it debuted in 2018, and sixth covered bond overall. Its last deal was a two-tranche trade in October 2019, comprising a $500m three year US dollar benchmark and a €750m 10 year euro.

A syndicate banker away from the leads said the non-legislative issue was a strong result for the issuer as it continues to grow its investor base across both euro and dollar markets.

“I’m really pleased for them,” he said, “and after the dislocated markets of earlier this year, then the rally and the undersupplied market we have now, from a timing perspective, it was spot on.

He praised the deal’s marketing and SMBC’s wider investor relations efforts.

“They’re putting themselves out there and giving the investor base access,” he added, “which is absolutely what they should be doing, and it paid off.”

A syndicate banker at one of the leads said the issue was launched on the back of positive investor feedback after a virtual roadshow that followed the deal’s announcement on Tuesday.

“Through elaborate marketing efforts,” he said, “the order book gained strong momentum, and the final order book size reached about €1.8bn, achieving a competitive re-offer spread of 24bps over mid swaps, reflective of strong investor demand.”

The banker away from the leads said the IPTs of the 28bp area could be considered on the generous side given that SMBC’s outstanding June 2026s were at 23.5bp.

“But I think it was fair and sensible,” he added, “and investors will be happy as that’s a decent chunk of change relative to other geographies – granted, it’s non-legislative, but it’s still a triple-A rated product.”

The lead banker said the order book, comprising around 70 accounts, was of very high quality and consisted of a broad investor base of asset managers, central banks and official institutions, insurers, pension funds, and bank treasuries. Germany, Austria and Switzerland were allocated 57%, the UK and Ireland 9%, France and the Benelux 7%, Scandinavia 13%, and others 9%.