CIF Euromortgage and Eurohypo were able to tighten guidance on new issues this (Thursday) morning by several basis points on the back of strong order books, and, with BayernLB, gave the primary market new momentum that could prove sustained.

In the wake of the German issues, a mandate for a three year Dexia Kommunalbank Deutschland issue was announced for the coming days, with Commerzbank, Dexia Capital Markets, Helaba, NordLB and UniCredit as bookrunners.

Eurohypo went out with a spread whisper of the mid to high 30s for a three year mortgage backed Pfandbrief, tightened this to the 35bp area as official guidance, revised this to 33bp-35bp, then set the final re-offer level at 33bp over mid-swaps.

A syndicate official away from the leads said that he was not surprised that the pricing had moved several basis points in a few steps.

“In every second tier German Pfandbrief these days there is always a bit of a price discovery process as it is not easy to work out where it should be in primary at all,” he said. “Even Deutsche Postbank moved from the high to low 20s with its 10 year in February.”

Commerzbank, DZ Bank, HSBC, Natixis, UBS built a book of around Eu2.5bn of Eurohypo’s issue, comprising more than 115 investors, and sized the issue at Eu1.5bn.

“I’m a little bit astonished with the Eu2.5bn book for Eurohypo, because it is not so well received, even by the German investor base,” said a German fund manager, “but the pricing was rather attractive.”

Bayerische Landesbank is pricing a Eu1.25bn November 2014 public sector Pfandbrief at 6bp over mid-swaps, after leads BayernLB, Credit Suisse, NordLB, SG, UniCredit went out with guidance of the 7bp over mid-swaps area. A whisper of the high single digits over mid-swaps had been used in premarketing yesterday (Tuesday).

“The high single digits had looked cheap,” said a banker away from the leads, “and 6bp was then the tightest level that they could have got to in light of the levels they had first discussed.”

The fund manager said that the BayernLB deal had mostly likely benefit from strong support among the Bavarian savings banks, who he said were price insensitive.

BNP Paribas, Deutsche Bank, DZ Bank, Natixis and Nomura opened books on a long 10 year obligations foncières benchmark for CIF Euromortgage with guidance of the mid to high 70s over mid-swaps. Guidance was revised to 72bp-75bp over and the leads built a book of more than Eu2.3bn. The deal will be sized at Eu1bn.

A banker away from the leads said that the issuer was right to have adopted a prudent approach by going out with initial talk that incorporated a large new issue premium. He said that the issuer’s June 2020 paper was trading at a wide bid/offer in the secondary market but that it would be hard to get hold of such paper wider than 62bp over.

“The 10 year part of the curve is a tricky trade right now because the market parameters have changed over the past couple of weeks, with yields having been falling,” he said. “But it is a great result for them to get to the tighter guidance and the low 70s makes sense.”

He suggested that the issuer might have moved today rather than wait for better conditions because of potential competing upcoming French supply. Société Générale SFH finishes a roadshow tomorrow (Friday) and a Eu2bn five to 10 year issue could follow, and other French names are said to be eyeing the market.

An investor said that today’s activity could kick off the second major wave of supply for the year after the first quarter.

“I would expect this could last until the summer break now,” he said. “But I’d expect, after how well the market held up at the beginning of the year in the face of heavy supply, that things should go OK.”