Abbey National Treasury Services was in the market today (Thursday) with a five year benchmark, making it the third UK issuer to come to the market in three days, following a RBS three year on Wednesday and a Barclays three year on Tuesday.

Leads Banco Santander, Barclays Capital, BNP Paribas, Danske Bank, Natixis and Royal Bank of Scotland set initial price thoughts on the Abbey National Treasury Services benchmark at the 150bp over mid-swaps area. The deal has been capped at Eu1bn, with orders exceeding Eu1.2bn bn by the time The Covered Bond Report went to press. The spread has been fixed at 150bp over, with order books due to close at around 1400 CET.

The 150bp over level compares with re-offer spreads of 52bp over and 93bp over for Eu2bn three year covered bonds from Barclays Bank and RBS, respectively.

A syndicate official away from the leads suggested pricing was slightly on the tight side.

“But I believe there is good interest for the trade,” he added, “particularly coming from a number of bank treasuries. It’s going to be less real money for this transaction and more banks.”

Another syndicate banker away from the deal said that the 150bp over area was “not unattractive”, comparing it with outstanding 2016 issues that he saw at around 120bp and 128bp over.

These levels suggested a new issue premium that was on the large side, he said.

While market participants were positive about the transaction, they expressed concern about the possibility of Santander’s ownership of the issuer affecting demand.

“We have seen that the market is open for quality UK issuers,” said a syndicate official away from the leads. “Of course we always have to take into account that Abbey is Santander.

“I’m not 100% sure how investors will react to that right now.

Royal Bank of Scotland yesterday sold a Eu2bn three year issue at 93bp over. Leads Banco Santander, BNP Paribas, Citi, RBS, UBS and UniCredit built a book of Eu3.5bn comprising 130 accounts. Final pricing came tighter than initial price thoughts of 95bp-100bp over, later tightened to guidance of 93bp-95bp over.

The UK took 28% of the bonds, the Nordics 28%, Germany 11%, US 10%, the Benelux 6.5%, Asia 6%, and others 10.5%. Bank treasuries took 49%, asset managers 17%, central banks 17%, banks 9%, pension funds 6%, and others 2%.