CaixaBank kept the euro bank Tier 2 market's strong run going with a €1bn 11-year non-call six transaction on Tuesday, although it came up against investor resistance on both size and spread as the book fell by some €750m from the peak.
The Spanish lender's deal follows a €1.5bn 10.25-year non-call 5.25 Tier 2 from compatriot, Banco Santander, which was priced at 285bp on May 16 and reopened the euro bank Tier 2 market after more than two months without supply. BPCE further proved the depth of demand for bank sub-debt, following the market's recovery from the March sell-off, with a highly sought-after €500m social 10-year non-call five Tier 2 on Monday.
CaixaBank leads BNP Paribas, CaixaBank, Citigroup, Morgan Stanley and Natixis offered the deal with initial price thoughts at mid-swaps plus 330bp area.
Guidance was set at 305bp (+/-5bp WPIR) and the size at €1bn, with demand then above €2.4bn. The book had fallen to €2bn by the time the leads set the spread at the tight end of the range at 300bp - around 10bp back of fair value, according to bankers at and away from the leads.
A later update revealed further attrition, with the leads disclosing that the final book stood above €1.65bn.
Some bankers away from the deal, following the sizeable drop, suggested that CaixaBank had been overly aggressive in both substantially cutting the spread and raising a large size, although they said the trade was still comfortably oversubscribed.
"It will be interesting to see how that deal performs," said one.
A banker at one of the leads said they had expected some pushback and noted that other FIG issuers have also encountered order book attrition when attempting to print a large size in recent weeks.
"Given they were the third issuer coming [with a euro Tier 2] and the ambition was to print €750m-€1bn, once we had confirmed the €1bn and moved 30bp all the way down to 10bp new issue concession we did see sensitivity from investors, on both the size and the new issue premium," he said.
"Probably some investors would have liked to see more concession for a €1bn size or a smaller size for that 300bp spread and 10bp new issue premium... but what was left was still a very good participation, as this is effectively a safe play with a nice coupon."
The deal is expected to be rated Ba1/BBB-/BBB-/BBBH (Moody’s/S&P/Fitch/DBRS).
Elsewhere on Tuesday, Italy's Credito Emiliano sold a €400m six-year non-call five green senior non-preferred.
Leads Barclays, BNP Paribas, Credit Agricole and IMI-Intesa Sanpaolo marketed the no-grow deal with IPTs of mid-swaps plus 275bp area.
The spread was later set at 250bp with books in excess of €1.65bn. The final book stood above €2.2bn.