Rabobank issued a €1bn 20 year transaction today (Thursday) at a minimal NIP and the tightest level the Dutch issuer has achieved in the maturity, but syndicate bankers differed as to the takeaways from a book that peaked above €1.6bn and ended around €1.2bn.

After announcing the mandate this (Thursday) morning, Rabobank leads LBBW, Natixis, NatWest, Rabobank and UBS went out with guidance of the mid-swaps plus 6bp area for a 20 year euro benchmark-sized transaction. After around two hours the leads reported books above €1.5bn, including €150m JLM interest, and the deal was ultimately priced at 3bp and sized at €1bn, with the final book around €1.2bn.

A syndicate banker away from the leads said that following the success of a €500m 20 year deal for compatriot de Volksbank on Tuesday of last week (11 November), today’s Rabobank trade followed a predictable path.

“De Volksbank reconfirmed you can do 20 years at low spreads,” he said, “and the fact it’s from Rabo and it’s a positive yielding bond, you just knew it was going to go down fairly nicely.”

The new issue was priced to yield 0.066%.

Another banker away from the leads noted that Rabobank’s book peaked at a lower level than the €1.7bn-plus of the smaller de Volksbank trade, and said the overall outcome did not live up to the strong results of some of Rabobank’s previous trades.

“Given that everyone is of the opinion that rich pricings work these days, particularly when offering a positive yield, this one was somewhat lacking lustre,” he added.

He suggested that while the pricing level may have been what was expected of Rabobank, the size was modest for the issuer.

“They can do more than that, that’s for certain,” he said, “so this one, measured by their own standards, will probably not be the golden trade of the year.”

A lead banker noted that while the oversubscription ratio was not as substantial as those achieved recently by issuers in very long maturities – such as de Volksbank and a MünchenerHyp €500m 20 year on 27 October that drew over €1bn orders – Rabobank’s issue was twice the size, and he suggested that other names might find it difficult to achieve a €1bn 20 year.

Fair value was around 2bp-3bp, according to syndicate bankers at and away from the leads, implying zero to 1bp of new issue premium. The 3bp spread is the tightest of the three 20 year deals Rabobank has issued.

Another syndicate banker away from the leads said the transaction “ticked all the right boxes” from an issuer’s perspective, including minimal to no new issue premium and a €1bn size. She noted that de Volksbank’s book also experienced price sensitivity, ultimately dropping to €1.1bn.

“You have fairly limited investor demand in these long dated covereds, and the books are rarely exploding,” she said. “So, bottom line, it got done, and it got done just 2bp wider versus where they would be with a 10 year, which tells you just how strong the covered bond market is.”

However, another banker said the new issue could indicate a cooling in long dated activity.

“There was a Berlin 25 year senior unsecured deal today that was similarly less exciting than hoped for,” he added.

The new issue is Rabobank’s second euro benchmark this year, following a €1.25bn 10 year in June.