Lower tier credits’ zeal to access the covered bond market was exemplified by new issues for Unicaja and Banca Monte dei Paschi di Siena this (Wednesday) morning, although there were suggestions that the brakes should be applied after a busy but successful session yesterday.

Bookbuilding on today’s two deals was progressing more slowly than yesterday and one fund manager said that while the books on deals launched yesterday (Tuesday) had been good and those today were OK, the primary market could nevertheless be moving onto more shaky ground.

“Perhaps the issuance window is closing,” he said. “The market is right now waiting to see what will come out of the various euro-zone meetings and pre-meetings.

“Personally I think this explains why there are the massive amounts of issuance. People are looking at what is going on and fearing a bad outcome, so there is the usual lemming behaviour.”

EU leaders are meeting in Brussels on Friday to discuss, among other topics, the euro-zone debt crisis.

However, a syndicate official on La Caixa’s deal said that taking advantage of issuance windows was just par for the course in today’s markets.

“There has been a lot of volatility in the market and issuance windows are coming and going in a matter of days,” he said. “So while we may see an improvement in secondary prices for a day or two, on the third day we could see a collapse in peripheral names.

“So it is just a question of trying to grab the first window that you can.”

Unicaja went out with a level of 250bp-260bp over mid-swaps for a five year transaction via leads Caja Madrid, HSBC, Goldman Sachs, LBBW and Natixis. A banker away from the leads said that the spread looked on the tight side, but that they were highly likely to reach a Eu500m size “with help from family and friends”.

The book had reached around Eu700m by 1300 CET and guidance had yet to be refined.

Other market participants were sanguine about the outlook, saying that the market remained in good shape.

“There are no clouds on the horizon for some kind of slowdown,” said one syndicate official. “There are some other issuers looking at the market and next week we will have a similar one to this.”

Indeed covered bond bankers said they are exploring the possibility of bringing even weaker names than UniCaja to market should investors prove receptive to the idea.

La Caixa attracted Eu1.6bn of orders to its Eu1.25bn four year benchmark, which it priced at 200bp over mid-swaps, a level that some market participants had considered ambitious going into bookbuilding.

“I think the new issue premium is slightly lower than it has been on some other trades recently, but it was still a reasonable new issue premium,” said a syndicate official at one of the leads. “However, we never thought of trying to take it inside 200bp in spite of the 200bp area guidance, because moving inside that would have been a real barrier for investors.”

Concerns had also been expressed about La Caixa coming with a four year deal soon after last month’s five year. However, the leads were happy with the level of demand for the new issue.

“It shaped up very nicely,” said Marko Nikolic, head of covered bond origination at Nomura. “By the time we opened books we were about 60%-70% done with indications of interest, and once it was officially announced we had a lot of small orders come in as well as a few large tickets.

“The book was highly granular, with some 100 accounts participating and a Eu1.6bn book was a great result in the current, volatile environment.”

Germany and Austria were allocated 41%, Spain 24%, France 12%, the UK7%, Italy 5%, Switzerland 3%, the Benelux 2%, and others 5%. Funds took 49%, banks 33%, pension funds 7%, insurance companies 5%, private banking 3%, hedge funds 1%, central banks and agencies 1%, and others 1%.

JP Morgan, La Caixa, LBBW, Nomura and SG were the bookrunners.

Banca Monte dei Paschi di Siena launched a five and a half year issue this morning, with market participants expecting it to confirm the solid support Italian issuers have enjoyed this week and last.

“The domestic bid for Italian names is still there, so I expect it to go well,” said one investor.

The shadow book is understood to have been over Eu500m when the deal was officially launched by leads Banca IMI, LBBW, Mediobanca, MPS, RBS and UBS with guidance of 180bp-185bp. The leads have fixed the pricing at 180bp over, with the books due to close at around 1300 London time, having surpassed Eu1.2bn by 1200.

The issuer’s last benchmark covered bond was a Eu1bn seven year deal at the start of February that was priced at 185bp over mid-swaps.

Banco Popolare yesterday attracted Eu1.6bn of orders for a Eu1.25bn deal, its largest covered bond, at guidance of 185bp over. Leads Banca Aletti, BNP Paribas, Goldman Sachs, RBS and UBS priced the deal at 185bp over.

The was last in the market on 10 February when it tapped a Eu700m March 2014 deal launched in January for Eu250m at 170bp over, and that was seen at around 165bp this week. Last week Banca Carige had sold a Eu500m issue at 163bp over mid-swaps on the back of a Eu1.2bn book.

“Popolare does trade back of Carige,” said a syndicate official at one of the leads, “and we priced with a new issue premium of around 7bp versus Banco Popolare’s outstandings.

“The issuer was keen to get Eu1bn done after having launched smaller issues before, and we were able to reach that target.”

Crédit Mutuel-CIC captured interest in long dated covered bonds yesterday when it sold the first 10 year benchmark since mid-February, a Eu1.5bn issue.

Leads BNP Paribas, Natixis and RBS went out with guidance of the 85bp over mid-swaps area and priced the benchmark in the middle of guidance, after having built a book of Eu1.7bn.

Some market participants had been concerned that uncertainty introduced into the interest rate outlook through comments from European Central Bank president Jean-Claude Trichet last week might have supressed demand, particularly at the longer end of the curve, as investors reassessed their strategy.

“I was a bit surprised about the strong demand,” said a syndicate official away from the leads. “This, and all the other transactions yesterday, have shown that the ECB announcement did not change investor behaviour in terms of policy at all, so they are going quite well across the curve.

“Over one and a half billion of demand for CM-CIC is a strong signal and the price, at 85bp, for CM-CIC was fair. That kind of demand clearly shows that the market is in good shape, so the sentiment has not changed at all.”

Royal Bank of Scotland built the largest order book of four benchmarks yesterday, Eu4.25bn for a Eu2bn five year benchmark priced at 110bp over mid-swaps, the tight end of guidance.

“RBS was a very, very strong deal,” said a banker away from the leads. “There had been a bit of an absence of investors on the UK curve for a while, but I think they are coming back and all those countries and issuers that give a decent spread over mid-swaps have enjoyed decent bookbuilding, so RBS was a very strong signal to the market, specifically the UK market.”

The deal is the UK bank’s second of the year, its first having been a Eu1bn seven year priced at 125bp over mid-swaps in the hectic first week of January.

“We’ve put together some very strong order books for the RBS deals,” said Jeremy Walsh, global head of covered bond syndicate at RBS. “The seven year was a bit tougher coming into a more difficult market with lots of issuance and when senior unsecured spreads were much wider.

“So to storm back with another book of over Eu4bn was very pleasing.”

Guidance on the new issue was 110bp-115bp over mid-swaps. The seven year launched in January had been trading at around 120bp and the issuer’s outstanding 10 year benchmark was at around 140bp.

The book comprised more than 185 accounts, with Germany taking 28%, the UK 17%, France 8%, Denmark 5%, the Netherlands 5%, Finland 5%, Norway 5%, Italy 4%, Austria 3%, Switzerland 3%, Sweden 3%, and others 14%. Banks were allocated 36%, fund managers 36%, central banks 13%, insurance companies 4%, pension funds 4%, and others 7%.