Société Générale group member Komerční banka of the Czech Republic has established a new, €5bn (CZK130bn) covered bond programme and is set to launch the first euro benchmark from the country after investor calls starting today (Wednesday).

Updates Tuesday’s article on the new programme to include the mandate announcement.

The base prospectus for the Czech covered bonds (hypoteční zástavní list) was published on Monday and yesterday (Tuesday) an inaugural five year euro benchmark was announced for launch after the investor calls, subject to market conditions.

SG is global co-ordinator and bookrunner alongside Barclays and JP Morgan.

Only one covered bond issue of €500m or greater has been launched out of the Czech Republic, a five and a half year deal from Raiffeisenbank in October 2014, although half of that was retained by the issuer.

Komerční’s new international programme has been set up in addition to a local CZK150bn Komerční banka programme. The two are backed by separate cover pools.

“The international cover pool will be created by the issuer primarily in order to enable the issuer to issue mortgage covered bonds denominated in euros on the international markets,” according to the prospectus.

The description “international cover pool” relates to the “international markets” being targeted with issuance, rather than to the collateral, which will be mortgage loans secured on residential property in the Czech Republic denominated in Czech korunas (or any currency that may replace it as the country’s official currency).

Komerční banka’s international issuance is expected to be rated AAA by Fitch.

Revised Czech covered bond legislation came into effect in January 2019.