Lead Building Society issued a £500m May 2027 on Tuesday at 45bp over Sonia from 48bp initially with no new issue concession and demand of £925m through joint lead managers Barclays, BNP Paribas, HSBC, Lloyds and UBS.
Bankers on the deal said the closest comparable bonds were five year sterling transactions from Skipton Building Society and Yorkshire Building Society which were issued this year and were both indicated in the region of 43bp-45bp when the Leeds deal was announced on Monday.
The sterling deal was not the “runaway success” seen in some recent euro benchmarks which have been subscribed by the four or five times, said a lead manager. Even so, the deal showed that the sterling primary covered bond market was “working well,” he said.
Unlike euro deals, which have typically attracted a high proportion of demand from real money accounts such as insurers and asset managers, this deal was mainly bought by bank treasuries and official institutions.
Leeds last visited the sterling covered bond market in January 2020. Tuesday’s deal extends its sterling curve and complements transactions due January 2025 and April 2023. It is the fifth sterling benchmark covered bond from a UK bank to be issued this year and the 11th overall.