UniCredit launched the first benchmark Italian covered bond in almost three months today (Tuesday), a Eu1bn seven year just a few basis points back of BTPs. Meanwhile, Aareal launched a Eu500m five year deal, LF Hypotek has chosen a three year maturity, and BNZ is tapping Aussie dollars.

DnB Nor Boligkreditt has also mandated BNP Paribas, Commerzbank, UBS and UniCredit for a 10 year benchmark, slated to be launched in the near future.

Syndicate officials said that the market was receptive to new issuance.

“Thursday and Friday everybody sort of got scared,” said a banker, “but now it’s better. Tuesday and Wednesday you have this window, so if you’re going to do something it’s going to be before the ECB meeting on Thursday.”

Another banker agreed, noting that Bund futures had come back from recent highs.

UniCredit entered the market this morning with a Eu1bn no-grow seven year mortgage backed OBG at 125bp-130bp over mid-swaps, which was then revised to the 125bp area after Eu1.5bn of demand had come in. Leads Banca IMI, Credit Suisse, Deutsche Bank, Natixis and UniCredit closed the books after an hour with orders understood to be in excess of Eu3bn, and fixed the spread at 123bp over.

“It went very well,” said a syndicate official from one of the leads. “We used the secondary levels to arrive at pricing.”

A banker at another of the leads said that the deal had come at about 4bp over BTPs, with Italy’s August 2018 at 120.6bp over. A syndicate official away from the leads put the spread at around 8bp over.

One banker contrasted the demand for UniCredit’s issue with that for a Eu1bn five year cédulas territoriales, backed by public sector debt, from Spain’s Santander last week, even though the Italian deal came tighter to its sovereign. He attributed the Italian’s success to it being mortgage rather than public sector backed, the larger amount of cédulas than OBG in circulation, and UniCredit’s ability to leverage off its German business.

A syndicate official away from the leads said the no-grow Eu1bn size had helped the trade.

“The Eu1bn opens up the book to so many more investors,” he said, “so it was a very well placed deal.

“Other Italian issuers should follow,” he added, “but we’ll see a shorter maturity.”

A smaller Italian bank is said to have mandated banks for a new issue.

Aareal Bank launched a Eu500m five year mortgage Pfandbrief today at the 35bp over mid-swaps area. Leads Barclays, Commerzbank, HSBC, UniCredit and WGZ closed books at 1130 London time with the book approaching Eu550m and are pricing the deal at 35bp.

“I think the pricing is kind of tight,” said a banker away from the leads. “We went for it somewhat wider yesterday and the other leads got it.”

Länsförsäkringar Hypotek has chosen the three year maturity for a new benchmark mandated to HSBC, Natixis, Nordea, UBS and UniCredit. A banker away from the leads suggested the transaction would hit screens tomorrow (Wednesday).

“The rumour is that they have moved from a five year to a three year because of market conditions,” he said.

Another banker said that the issuer’s only outstanding benchmark, a 2015, was quite illiquid and that it tended to be quoted at wider spreads as a result, meaning that LF could achieve a tighter level in a shorter maturity.

Bank of New Zealand is in the Australian dollar market with its first covered bond in the currency through leads HSBC, RBC and RBS. Guidance for the five year deal is understood to be 88bp-90bp over swaps.

One banker said that a A$600m five year deal launched by DnB Nor Boligkreditt last week at 85bp over was this week at 77bp bid, and suggested that BNZ should therefore sell easily at the wider level.