ING opened December with a rare €1.5bn 10 year covered bond today (Wednesday) that attracted a peak book of over €2.4bn in a “straightforward” trade bankers said pointed to the market remaining open, with investors still willing to participate in spite of year-end and volatility.

ING Bank NV leads Credit Suisse, Danske, HSBC, ING, LBBW, NordLB and UniCredit announced the mandate this morning and opened books with initial guidance of the mid-swaps plus 5bp area for a December 2031 euro benchmark-sized Dutch covered bond, expected rating triple-A. After an hour and 20 minutes, they reported books above €1.7bn, including €90m in joint lead manager interest. After two hours and 10 minutes, they fixed the spread at plus 1bp on the back of books above €1.9bn. The size was ultimately set at €1.5bn on the back of order books in excess of €2.4bn, JLM interest unchanged.

A lead syndicate banker said she was happy to see investors still willing to participate at this time of the year, in spite of recent volatility.

“We are very happy with the trade,” she added. “It was very straightforward. We had seen that the covered bond space had been quite resilient to the recent moves in other asset classes.

“What we saw in the secondary market was very encouraging, and the transactions that happened last week went extremely well, too. So for us, the window was there.”

Although the German arm of the group, ING-DiBa, issued a €1.25bn seven year Pfandbrief in September, and other ING entities have also been active in the past two years, the Dutch entity had not issued a euro benchmark since February 2019, when it sold a €2bn 10 year, and a syndicate banker at one of the leads said ING’s rarity contributed to the deal generating a lot of interest.

“Ten years is a good spot in the market,” he added. “There’s good relative value versus govies and agencies, and it’s a tenor where you still have many bank treasuries playing compared with longer maturities.

“So it wasn’t really difficult to pick 10s – look at Rabobank from last week: that was a good trade, and has even performed well in the secondary market. So we had a very good feeling going into it.”

Rabobank attracted some €2.5bn of demand to a €1.5bn 10 year deal on Tuesday of last week (23 November). That €1.5bn Dutch 10 year was also priced at mid-swaps plus 1bp, which bankers said reflected a new issue premium of zero to 0.5bp.

According to pre-announcement comparables circulated by the leads this morning, Rabobank’s trade was at mid-swaps flat, mid. ING Bank NV’s April 2028s were at minus 3bp and its February 2029s at minus 2bp, and ING Belgium February 2030s at minus 1bp.

The lead bankers put fair value for the new issue at mid-swaps flat, based on Rabobank’s pricing and trading levels, implying a new issue premium of 1bp, although one noted that fair value could be seen slightly tighter based on ING’s outstandings.

“All in all, we are extremely happy with the results, both price and size,” he said.

“It’s not super-late in the year,” he added, “and still clearly an open market, with a little bit of stabilisation and turnaround over the last couple of days.”

A syndicate banker said that at least one other issuer had been looking to come to the market in the same window as ING, but that it remained to be seen if the issuer would still proceed.

Photo: ING Cedar offices, Amsterdam; Copyright Egbert de Boer