Liberbank’s inaugural covered bond issued on Wednesday showed that investors are still hungry for paper that offers a positive yield and good relative value. The Spanish deal drew more than twice as much demand as Skipton Building Society’s competing negative yielding transaction, which was the third UK covered bond issued this week.
Liberbank was set to price a €1bn 10 year Cedulas Hipotecarias (CH) at 35bp over mid-swaps with demand of €1.7bn. BBVA, Crédit Agricole, Commerzbank and UBS initially marketed the deal, which is rated Aa2, at 40bp over.
At that level the bond looked particularly appealing relative to the most recent Spanish