RLB Vorarlberg issued the first public Austrian covered bond of the year today (Wednesday), a €300m 15 year that was more than three times subscribed and priced flat to fair value, and syndicate bankers said its success was helped by its emergence against the backdrop of an ailing primary pipeline.

After announcing the mandate yesterday (Tuesday), Raiffeisenlandesbank Vorarlberg leads DekaBank, DZ, Erste, RBI and UniCredit went out this (Wednesday) morning with guidance of the mid-swaps plus 8bp area for the €300m no-grow 15 year hypothekarisch fundierte Bankschuldverschreibungen. After around 50 minutes, books were reported as being over €750m, excluding joint lead manager interest, and after around an hour and 25 minutes, the spread was set at 4bp on the back of over €900m of demand, including €65m JLM interest. The final book good at re-offer was over €950m, including €50m JLM interest.

The deal represented textbook execution, according to a syndicate banker away from the leads, who highlighted the swift development of the book.

“It’s clear everyone had time to look at this and found good value,” he said, “so really good timing on their behalf, and 15 years is a sweet spot.

“It’s a very good trade.”

He suggested that in January’s busier market, RLB Vorarlberg would probably not have landed at 4bp with the same level of oversubscription as it did today, and a lead banker agreed.

“If markets were more lively than they are, you would probably run the risk of getting left out in the cold because you are the smallest kid on the block,” he said, “whereas now you may be small, but you are the only one.”

He said the deal went “marvellously”, as demonstrated by the more than three times subscribed book.

The new issue was priced flat to fair value, according to bankers at and away from the leads, who cited RLB Vorarlberg November 2034 sub-benchmark paper at around 4bp.

“We came to the conclusion there was no curve between long 13 years and new 15 years,” said the lead banker, “meaning zero new issue concession – so not a lot of cream left on top, but I think covered bond investors are more than used to this.”

The orderbook comprised the usual suspects, with additional Austrian support, he added.

“So this works decently, and you’re still enjoying the central bank support.”

Another syndicate banker said that while RLB Vorarlberg’s trade demonstrated the opportunities available for smaller covered bonds in today’s market, issuers are unlikely to change course if they were not already planning to approach the market.

Further euro covered bond activity is unlikely for the remainder of the week, he added, meaning February is all but over for the asset class.

“I would be truly surprised if there is anything left,” he said.

Another syndicate banker said the last euro benchmark, a €500m 20 year NN Bank transaction launched on Monday at 2bp, was today at mid-swaps flat to minus 0.5bp.

“This shows the market is strong,” he said, “so if I were one of these Dutch or French issuers who have a need for longer dated issuance, I would definitely pay closer attention to the market now, that’s for sure.”