Yorkshire Building Society has diversified its funding with the issue of €500m (£362m) of five-year covered bonds in its latest deal with institutional investors.
The society said the deal will provide long-term finance at a cost effective level which it will pass on to customers via good value mortgages.
YBS staged a three-day road show across Netherlands and Germany last week following the upgrade of its covered bond rating to the highest rating of triple A (Aaa) by Moody’s.
The initial price guidance saw the society reach a book size of €950m (£688m), nearly two-times over-subscribed, from 50 institutional investors but the market was weaker as earlier deals were not well received by the market. Pricing was tightened which led to a drop in the book size, but this still allowed the society to achieve its target amount of €500m Aaa/AAA rated notes from 47 institutional investors.
More than 90 per cent of investors were from outside the UK.
Chris Parrish, Yorkshire Building Society’s head of treasury, said: “We are delighted with the deal. It diversifies our funding and provides long-term finance at a cost effective level which we are then able to pass on to customers by providing further good value mortgages.”