Leads Caixa Banco de Investimento, HSBC, JP Morgan and Société Générale priced the Caixa Geral issue, which is also the first benchmark Portuguese public sector covered bond, at 85bp over mid-swaps, inside the 90bp-100bp range that had been announced the day before.
By Wednesday evening Eu1bn of indicative orders had been received, giving the leads the confidence to open books the following morning at the 90bp over mid-swaps area.
“We figured that 90bp over was clearly do-able,” said a syndicate official at one of the leads.
Within a few minutes of the books being opened, orders reached Eu3bn, at which stage the leads revised the level.
“We went straight to 85bp over because we felt the book would clearly hold up,” said the official. “We only lost one account.”
Caixa Geral’s deal came one day after Banco BPI reopened the Portuguese sector with a Eu1bn three year mortgage-backed benchmark that was priced at 97bp over mid-swaps.
“BPI was able to get into the starting blocks just a second quicker, and once it was out we didn’t want to interfere,” said the syndicate official.
He said that Caixa Geral’s issue is being bid at least 2bp-3bp tighter today (Friday).
Real money demand dominated the transaction, accounting for 66% of placement. Fund managers took 48%, banks 29%, central banks 11%, insurance companies and pension funds 7%, and others 5%.
Five euro-zone central banks are understood to have participated in the Caixa Geral transaction.
“The central bank purchases are useful, but clearly with around 11% of the Caixa Geral deal it wasn’t a deciding factor in the pricing”, said the syndicate official.
German and Austrian accounts were allocated 32% of the issue, France 18%, Portugal 16%, the Benelux and Switzerland 12%, the UK 9%, Spain 6%, the Nordic area 4% and others 3%.
Crédit Agricole yesterday (Thursday) priced a Eu1.25bn five year benchmark at 72bp over mid-swaps, inside guidance of the 75bp over mid-swaps area.
One fund manager had singled out Crédit Agricole as the most aggressive of this week’s deals, but a syndicate official at one of the leads said that a BNP Paribas 2012 issue and a 2016 for Crédit Agricole pointed to the 70bp-75bp range as fair value.
The deal was priced off a Eu3.4bn orderbook.
Asset managers were allocated 46% of the benchmark, banks 32%, central banks 12%, insurance companies 7%, pension funds 2%, and others 1%.
German and Austrian accounts bought 43%, France 17%, the UK 14%, the Benelux 6%, the Nordic area 6%, Iberia 3%, Asia 2%, and others 7%.