New benchmark issues for Crédit Mutuel Arkéa and UniCredit Bank AG hit the market this (Tuesday) morning alongside a tap for Lloyds, hot on the heels of a report that the European Central Bank is considering launching a second covered bond purchase programme.

A syndicate official said it appeared that yesterday’s media report of a new purchase programme has been a catalyst for issuance and that people were re-assessing the situation.

“Sentiment has completely turned around the last 24 hours,” he said. “All covered bonds curves opened tighter in the morning and the selling pressure completely disappeared.

“We are certainly not out of the woods, but if the ECB intentions are confirmed early October, covered bonds will get a permanent back top-bid and spreads could tighten durably.”

A syndicate official away from the leads echoed this position.

“Clearly it’s been a catalyst for arrangers to touch base with investors and see if there’s a ray of hope,” he said.

A market participant said that Spanish, French and Italian names were trading up to 15bp tighter this morning, although the remainder of the market was unchanged.

Credit Mutuel Arkéa launched a 10 year inaugural public sector obligations foncières issue at the 125bp over mid-swaps area. Bookrunners Crédit Agricole, DZ Bank and UniCredit, with joint lead manager Credit Mutuel Arkéa, had built books of more than Eu900m by the time of their closing at 1245 CET.

The pricing was fixed at 125bp over and the deal sized at Eu750m. A syndicate official at one of the leads said the pricing was based on the issuer’s obligations à l’habitat curve, which included an outstanding April 2021 Credit Mutuel Arkéa trading at 110bp bid when this morning’s transaction was launched.

The original size targeted was between Eu500m and Eu800m, added the syndicate official.

“Because the issuer doesn’t have too much collateral,” he said, “they are printing Eu750m and keeping assets for another deal likely early 2012.”

French institutions were driving demand, he added – which came as no surprise to syndicate officials away from the leads.

“The French will support their own deals,” said one. “I think it should have a decent chance of doing well.”

Another banker away from the leads said the choice of Credit Mutuel Arkéa coming now was not ideal considering there had been a lot of supply in French covered bonds this year.

“But windows are so difficult to catch,” he said, “that I’m sure there is just relief that this project is done.”

UniCredit Bank AG was also in the market, with a four year mortgage Pfandbrief. Leads Commerzbank, Landesbank Baden-Württemberg, Natixis and Santander set price guidance of the 35bp area but had not finalised pricing or size by the time The Covered Bond Report went to press. The books were opened at 1300 CET.

A syndicate official away from the leads suggested UniCredit was paying a new issue premium of about 15bp.

“Pfandbriefe do trade very expensively,” he said, “whereas other countries are back to 2008 levels or wider.”

Another banker away from the leads said he understood it to be going well.

Lloyds TSB Bank added Eu250m to an outstanding Eu750m January 2023 deal via leads JP Morgan, Lloyds and Natixis. The final pricing was set at 160bp over mid-swaps, in line with initial guidance.

A syndicate official at one of the leads said the outstanding paper was trading at 145bp-150bp this morning, so they paid a new issue premium of about 10bp. The books were closed by 1230 CET with orders of around Eu270m.

“We are pleased with the transactions,” said the syndicate official. “The idea was to bring the size to Eu1bn and we did that quickly.”

A banker away from the leads called the trade “spot-on”.

Finland’s Sampo Housing Loan Bank and UK’s Coventry Building Society finished roadshows last week. However, syndicate officials at their leads said they were not going to push these trades out before more tangible results in the market.