Aegon Bank reopened the long end of the euro covered bond market today (Wednesday) with a €500m no-grow 15 year inaugural soft bullet benchmark, and bankers said the Dutch issuer had negotiated recent rates moves and repricing well to execute a successful issue.

Following a mandate announcement on Monday and investor calls, leads Barclays, Citi, Crédit Agricole, HSBC and Rabobank this morning went out with initial guidance of the mid-swaps plus 12bp area for the €500m no-grow June 2036 issue, with an expected AAA S&P rating. After an hour and a quarter, books were in excess of €750m, including €80m in joint lead manager interest, and after close to an hour and a half guidance was revised to 8bp+/-1bp, will price in range, on the back of books above €1.1bn, including €100m JLM interest. After about three hours, the spread was fixed at 8bp on the back of books above €1.1bn, including €80m JLM interest, and the final order book was largely unchanged.

The new issue is the first of 10 years or longer since 18 May, when a €500m no-grow 20 year for Raiffeisen-Landesbank Steiermark failed to gain any momentum and was barely subscribed. Aegon published the prospectus for its new soft bullet programme on 7 May and bankers said the Dutch bank had also been considering tapping the market two weeks ago.

Syndicate bankers away from the deal today said Aegon had negotiated the market moves well to successfully inaugurate its switch from conditional pass-through to soft bullet issuance.

“I am sure they must be happy with it,” said one. “They made a very good choice of waiting for a few days after the previous difficult long-dated issuance.

“It’s a totally different market to early in the year, when you could almost get away with anything,” he added, “but it is open if you’re willing to provide some value.”

He said he was not surprised to see a starting point of 12bp, which he said was “very attractive”, while another banker away from the leads said it erred on the generous side. However, they said the pick-up offered at the eventual re-offer of 8bp was commensurate with what investors are demanding.

They put fair value at around 4bp, implying a new issue premium of around 4bp, but a banker at one of the leads put the new issue premium at 2bp, based on the bid side – rather than the mid – of where comparable NN Bank paper was trading.

“Because the market has widened, there has been a general shift to see where clearing levels really are,” he said, “rather than just slotting down the middle.”

The lead banker said the two day lead-in time had contributed to the successful outcome, with the issuer able to engage with investors, as had its decision to wait until this week to issue.

“The view was not to rush it,” he said.

“Overall, this is a very pleasing result,” he added, “to see an issuer able to get €500m done 2bp back of the bid side at the longer end of the curve, which probably has a smaller investor universe.”

The new covered bond benchmark is the first of Aegon’s that is eligible for CBPP3, with its previous CPT issuance having been ineligible, and a banker away from the leads said the central bank bid can only have helped.

With public holidays in some parts of Europe tomorrow (Thursday), further issuance is not expected until next week.