Credito Emiliano (Credem) attracted some €1.6bn of orders to a rare seven year OBG today (Wednesday), allowing it to print €750m in a “strong” result for the Italian issuer. Coventry Building Society meanwhile mandated only the second UK euro benchmark of the year.

Following a mandate announcement on Monday, Credem leads Barclays, BNP Paribas, Crédit Agricole, SG and UniCredit this morning went out with guidance of the mid-swaps plus 17bp area for the July 2028 OBG, with expected Aa3/AA- ratings (Moody’s/Fitch). After a little over an hour, the leads reported books above €1.1bn, including €145m of joint lead manager interest, and after around two and a half hours, they set the pricing at 14bp and the size at €750m on the back of books above €1.25bn, including €145m of JLM interest. The final order book was around €1.6bn, including €135m of JLM interest.

A syndicate banker at one of the leads said it was a strong result for the issuer, which had been targeting a €750m trade.

“After the first update, the book didn’t grow very fast,” he added, “but when we set the spread at 14bp there was a bit of an uptick in demand as some investors had been waiting for the final pricing before committing. At €1.6bn, we were comfortably twice subscribed.”

The OBG benchmark is only the third this year, and the lead banker said that with Italian covered bonds in general squeezed, there was an element of price discovery to the process.

“We took our cue from where investors were interested,” he said. “NAB’s seven and a half year trade on Monday [€850m re-offered at 10bp] told us that something closer to 10bp was not realistic, but we were confident that we could come inside 15bp and were able to do that.”

According to pre-announcement comparables circulated by the leads, Mediobanca November 2029s were quoted at 3bp, mid, Crédit Agricole Italia January 2028s and March 2029s at 4bp, and Intesa Sanpaolo October 2027s at 9bp and January 2030s at 11bp.

A syndicate banker away from the leads put fair value at 15bp, implying a negative new issue premium of 1bp.

While the issuer might not have the biggest following and spreads against core covered bonds have come down, he said, technicals including low supply and high redemptions, as well as the ECB bid, helped support the Italian’s outcome.

“It shows the strong capacity of small financial institutions to print covered bonds at very tight spreads,” said the syndicate banker.

“They went for an ideal spot on the curve,” he added, “the positive yield was also an important factor in this environment, in addition to the double-digit spread.”

The deal was priced at a yield of 0.039%.

Coventry Building Society joined the pipeline today, having mandated Lloyds, Natixis, Santander, UBS and UniCredit for a seven year euro benchmark. It will be the UK issuer’s first euro benchmark since a €500m seven year in June 2019, and only the second UK euro benchmark this year, following a €500m 20 year for Nationwide Building Society in April.

Crédit Agricole Home Loan SFH could hit the market tomorrow (Thursday), after having held investor calls today for an inaugural, short seven year social covered bond.