Achmea Bank had the euro benchmark covered bond market to itself today (Monday), with a €500m no-grow seven year issue encountering negligible impact from the imminent French no confidence vote and attracting a peak €1.4bn-plus of orders and paying a minimal new issue premium.

Leads ABN Amro, BBVA, BNP Paribas, Deutsche, DZ and LBBW opened books with initial guidance of the mid-swaps plus 43bp area for the €500m September 2032 Dutch covered bond, expected rating AAA (S&P). After around an hour and 40 minutes, they reported books above €1.25bn, including €150m of JLM interest, and after around two and three-quarter hours, the set the spread at 37bp on the back of books in excess of €1.4bn, pre-reconciliation and including the JLM interest. The final book was above €1bn, excluding JLM interest.

“This was a very nice trade,” said a syndicate banker at one of the leads, “with probably even 1bp more of dynamics in terms of spread tightening than most of the previous transactions we have witnessed.”

He saw fair value for the September 2032 issue at 36bp-37bp, citing Achmea’s outstanding May 2032s at around 35bp, with the new issue premium hence zero to 1bp depending on how much the curve extension is worth.

The pace of the bookbuild and character of demand was symptomatic of prevailing market conditions, said the lead banker.

“The guys who normally bring speed to the process, like network orders from larger German lenders, banks, intermediaries, or whatever, they are staying sidelined for the time being,” he said. “So it’s become more of a real money game. That’s not exactly helpful to secondary market liquidity, but issuers like it because they feel they have more control and that it can be placed into safer hands.

“So deals aren’t going as quickly as in boom phases and it takes a bit longer than, say, 45 minutes before you can put out a one-liner like ‘above €1bn’. There’s nothing wrong with this, and as long as people don’t get nervous about it, it can be positive.”

The imminent French no confidence vote was seen as a reason for the primary market being relatively quiet today – alongside many issuers having already completed planned funding exercises, some intentionally ahead of the vote – but Achmea and its leads were confident in proceeding, according to the lead banker.

“To the extent they speak French, people are glued to their televisions,” he said. “But we were of the opinion that it was a good day for doing so, and I think we were proven right. Because whatever happens, it can’t get any worse than Bayrou losing this confidence vote, and most market participants are taking that as a given, which means it has been priced in – the only surprise would be him winning, even if that’s rather unrealistic.”

The new issue is Achmea’s third euro benchmark of 2025, following €500m seven and five year issues in May and June, respectively. The last Dutch issuance was a dual-tranche ING trade on 26 August, split into a €1.75bn five year tranche priced at mid-swaps plus 27bp and a €750m 10 year at 40bp.