It was suggested that ABN Amro was coming up against investor fatigue for long dated supply this (Wednesday) morning, after it widened pricing thoughts on a deal in the 10 year part of the curve. Meanwhile, Credit Suisse found success with the tightest five year benchmark of the year.

The Dutch issuer opened books on a 10 year issue this morning via leads ABN Amro, Deutsche Bank, Natixis and UniCredit, with official guidance set at the 120bp over area. This follows initial pricing thoughts of the mid to high 110bps for a 10.25 year that formed the basis for indications of interest yesterday (Tuesday).

Orders for the deal are well above Eu1bn, according to a syndicate official at one of the leads, and the final spread has been fixed at 120bp over.

A syndicate official away from the leads said that he was shocked by what he described as the issuer having to widen the level so much, raising the question of whether this was a sign of investor fatigue. The positive outcome of a CM-CIC issue yesterday contributed to his surprise about ABN Amro’s transaction, he added, because the French bank’s deal was also long dated (12 years) but managed to attract good demand for what ended up as a Eu1.25bn issue.

“At some point the music will stop playing,” he said.

Crédit Mutuel-CIC Home Loan SFH was one of three issuers in the euro benchmark market yesterday and priced its Eu1.25bn 12 year deal at 172bp over, the tight end of guidance of the 175bp over area [amended]. Another syndicate banker said that by hitting a 4.25% coupon CM-CIC’s deal was a unique offering and “a great deal”.

He said that initial pricing thoughts on ABN Amro’s deal were ambitious and that there is investor fatigue in the 10 year maturity range, contrasting this with the five year sector where deals for Commonwealth Bank of Australia, DNB Boligkreditt, and Nordea Bank Finland are trading tighter than re-offer. ABN Amro’s deal is the seventh euro benchmark to come with a maturity of 10 years or longer.

“The depth of the bank/asset manager bid is significant, especially compared to the long end,” he said. “The juice is out of the long end.”

He said that ABN Amro had made “a gutsy move”.

ING issued a Eu1.75bn 10 year deal at 110bp over mid-swaps last Tuesday (3 January), which was said to be trading at 108bp bid today.

“In secondaries ABN trades very well,” he said, “if not flat to ING”.

A syndicate banker at one of the leads played down the move from initial pricing thoughts to the official guidance, saying that the levels were not that far apart, with the 120bp over also representing a concretisation of the mid to high 110s and an eye-catching number. He added that the IoI process is there to gather and be able to respond to investor feedback to execute the ideal trade.

“We did it the right way because we will get a Eu1bn deal and price it in the guidance range,” he said. “A deal is a good deal.”

Credit Suisse came to the market today with a five year benchmark transaction at a final spread at 60bp over mid-swaps, the tightest five year done this year. Leads Commerzbank, Crédit Agricole, Credit Suisse, Danske, ING and NordLB fixed the spread on the tight of initial guidance in the low 60bp area.

A syndicate official from one of the leads said the trade “had definitely achieved what it wants to”. He added that it was a very good order book with orders of about Eu1.5bn by closing at 1115 London time.

Pricing comparables on the Credit Suisse curve included an outstanding December 2015 in the high 30s mid and an October 2018 in the high 60s mid. UBS launched a Eu1.5bn five year at 61bp over last Wednesday, which was trading at 60bp mid.

“The 60bp number was pretty much bang-on,” said the syndicate official.

He saw a new issue premium on the Credit Suisse deal of 8bp.

“It was the tightest five year done this year,” he said.

A syndicate official away from the leads said the trade had benefitted from a safe haven status.

“It has gone very well,” he said.

Royal Bank of Scotland sold the second new issue in sterling this year yesterday, a £1bn (Eu1.21bn) 12 year at 275bp over Gilts, after Barclays entered the market last week with a 10 year sterling denominated covered bond. Leads BNP Paribas, JP Morgan, Lloyds, RBC and RBS built books of around £1.5bn by closing.

RBS had conducted investor meetings last week ahead of launching the deal. The UK took 95% while Germany took 4%, and others 1%. Asset managers were allocated 80%, insurance companies 16%, banks 3%, and pension funds 1%.

The cumulative total of buying under the ECB’s covered bond purchase programme (CBPP2) increased by Eu181m this morning, reaching Eu3.345bn. The increase is the largest since that reported on 21 December and coincides with the settlement of ING’s Eu1.75bn 10 year benchmark. The issuer said that Eurosystem buying accounted for around 10% (Eu175m) of the deal.