Abbey is adding to the reopening of the UK sterling covered bond market with a £750m (Eu902m) three year FRN today (Monday) after Lloyds last Tuesday sold the first UK deal since June 2012 and UK issuers get the new year off to an active start.

Santander offices, London

Abbey National Treasury Services will price its Regulated Covered Bond at 35bp over three month Libor, 5bp wider than where Lloyds Bank priced a £1bn issue, also a Regulated Covered Bond, last Tuesday (7 January).

Abbey leads BNP Paribas, Lloyds, RBS and Santander built an order book of around £1bn for the new floating rate note, after having first marketed it in the high 30s and then the 37bp over area.

A lead syndicate official said that the 5bp spread differential between Abbey and Lloyds’ sterling covered bonds is in line with how the credits trade in euro covered bonds.

In November Abbey reopened the UK euro covered bond market after more than one-and-a-half years without supply, pricing a Eu1bn seven year issue, with Lloyds last week responsible for the resumption of UK sterling covered bond issuance. Its deal was the largest sterling benchmark covered bond since March 2012 and the largest fully syndicated sterling three year FRN to date. A Clydesdale Bank covered bond from June 2012 had been the last UK sterling issue before Lloyds’ move.

Today’s covered bond for Abbey comes after the issuer raised Eu1bn of five year funding in a euro senior unsecured transaction last Tuesday.

The UK FIG market has got off to a relatively active start this year compared with last year, when lower funding needs and the Bank of England’s Funding for Lending Scheme (FLS) combined to limit new supply from UK banks.