ABN Amro issued the largest euro benchmark covered bond of 20 years or longer in at least a decade today (Friday), a €1.5bn deal announced after yesterday’s ECB meeting proved a “non-event” and gave the market renewed momentum, with My Money Bank due in 10 years next week.

ABN Amro announced the mandate for the euro benchmark 20 year covered bond yesterday (Thursday) after the European Central Bank governing council meeting and press conference had concluded in the afternoon, with ABN Amro, Danske, DZ, Société Générale and UBS as leads.

The leads this morning opened books with guidance of the mid-swaps plus 10bp area for the triple-A rated September 2041 issue. After 45 minutes, they reported books above €1bn, excluding joint lead manager interest. After two hours, the spread was fixed at plus 6bp on the back of books in excess of €2bn, including €145m of JLM interest. After two hours and 20 minutes, the size was set at €1.5bn on the back of an order book above €2.5bn, pre-reconciliation, excluding JLM interest.

The largest previous euro benchmarks of 20 years or longer in the past decade were for €1.25bn, most recently 20 year deals for Rabobank and ABN Amro itself in April 2018.

Syndicate bankers at the leads were delighted with the outcome of the new issue.

“It was a fantastic trade,” said one. “It was really fun to be on the team today.”

They attributed the decision to go out on a Friday – which they acknowledged was an unusual day for a new benchmark – to the prevailing strength of the market and a benign outcome to the ECB meeting, but highlighted that the deal had been pre-announced, thereby preparing market participants for the trade.

“The idea was basically to wait until ECB was done, and to see if you had any effects in the market,” said the lead banker. “The ECB meeting turned out to be exactly the non-event that everybody had hoped for.”

The ECB meeting signalled a “moderation” in the pace of PEPP purchases, with president Christine Lagarde labelling it a “recalibration” rather than a tapering. Market participants generally viewed the overall tone as dovish, with yields falling in the aftermath of the meeting.

The covered bond market had also successfully passed the first post-summer test of the long end on Wednesday, when fellow Dutch issuer de Volksbank attracted over €1.8bn of orders to a €600m 20 year deal, and the success of that trade also spurred ABN Amro into going ahead with today’s transaction, according to the lead banker.

He put fair value for the deal at 4bp, based on ABN Amro’s outstandings and de Volksbank’s 20 year coming at 6bp over, implying a new issue premium of 2bp.

“Some of these long-dated bonds trade a bit weird in the secondary market,” he added, “so it makes more sense to look at newer bonds out there. So, I think it’s fair to say plus 4bp.”

The lead banker noted that de Volksbank’s new issue had already performed in the aftermarket, but that ABN Amro’s larger transaction might take longer to do so.

The order book of some €2.5bn included not only traditional long-end buyers, such as insurance companies and pension funds, according to the lead banker, but also bank treasuries.

Syndicate bankers expect more long-dated supply to follow in the coming week, citing the yield environment – ABN Amro’s 20 year was priced with a 0.40% coupon and at a yield of 0.419%.

“The market is very good, and strategically, it makes sense,” said one. “Sometimes it makes more sense to put a trade out in the market that’s active than to wait until it’s very quiet again.”

My Money Bank SCF (MMB SCF) is due with a €500m no-grow 10 year deal, having also mandated after the ECB meeting yesterday. ABN Amro, Crédit Agricole, Dekabank, DZ, HSBC and Natixis are leads.

According to pre-announcement comparables circulated by the leads, MMB SCF September 2029s were quoted at 5bp over mid-swaps, mid, and its October 2030s at 5.5bp.