Banco BPI achieved a take-up rate of just under 8% in a cash for covered bond tender offer that closed on Thursday, well below the participation level in the first such buyback to have closed this year but a result that did not seem to surprise market participants given a tight premium.

The Portuguese bank on 26 January launched a tender offer inviting holders of a Eu1bn 3.25% 2015 covered bond to sell the bond for a cash price of 85% of par value, and investors ended up tendering Eu75.65m, or 7.565%, of the bonds.

Banco BPI, Citi and Deutsche Bank were joint dealers.

The high single digit take-up rate compares with an acceptance rate of 42% in a tender offer that National Bank of Greece closed in the middle of January. That was the first of a series of tender offers launched by issuers for what market participants say are a range of reasons, with cheap three year funding via the ECB’s long term repo operations (LTROs) seen spurring these moves.

The close of Banco BPI’s tender offer leaves buyback operations underway for Spain’s CatalunyaCaixa, Italy’s Cassa Depositi e Prestiti (CDP), and Austria’s Bank für Arbeit und Wirtschaft PSK (Bawag).

Florian Eichert, senior covered bond analyst at Crédit Agricole, last week said that the participation rate in NBG’s tender offer is “not the standard in our view” and that acceptance rates for other tender offers are likely to be much lower.

However, he said that a Crédit Agricole investor survey showed a surprising number of investors open to tenders in general if the price is right, with 41% ticking the “If the tender price is correct all parties can benefit from this” survey option.

“Only 28% came back telling us that covered bonds are not the correct product for tender offers,” he said.

A banker close to Banco BPI’s transaction said that the participation rate is not surprising given that the purchase price offered a very limited premium, of 1%-2%. NBG was seen offering a premium of around 20% or 30% by some market participants.

Banco BPI said that the tender offer was carried out “to optimise the BPI Group’s capital structure under the most recent regulatory recommendations”.

The banker close to the transaction said that an assessment of the success or otherwise of tender offers often depends on the issuer’s goals and its approach to tender offers, with some willing to pay higher premiums and others taking more of an opportunistic approach.

He suggested that the recent market rally will have hurt Banco BPI’s tender offer.

A banker away from the transaction said that the rally can make buybacks more difficult by reducing the incentive to sell, although another said that he would discount the rally as a major driver of participation in BPI’s tender offer.

He said that while Spanish and Italian bonds had rallied, Portuguese government spreads were fairly volatile and not correlated to other peripheral jurisdictions. Like the banker close to BPI’s transaction, he said that tender offers are carried out for a variety of reasons and put BPI’s in the “opportunistic” camp.

He said that offering a 2% premium was a clear message that the issuer was not looking to “hoover up” bonds for strategic reasons, and said that the take-up of a RMBS tender offer launched in December was also in the high single figures given similar pricing.

Banco BPI on 16 January closed a tender offer that targeted Eu2.17bn from 10 tranches of Douro Mortgages 1, 2 and 3, with some Eu150m of the securitisations sold by investors (around 7%).

Banco BPI mortgage covered bonds were downgraded from A+ to A- by Standard & Poor’s on 31 January, a few days after the Portuguese bank launched its tender offer.