Barclays Bank, National Australia Bank and SG SFH took the number of benchmark covered bonds to 10 this week, with market participants looking forward to a public holiday in some parts of Europe tomorrow (Friday) providing a break to help avoid investor fatigue setting in.

Since the market reopened on Tuesday, there has been Eu11.5bn of euro benchmark supply, with deals ranging from Eu1.25bn to Eu2bn, while Barclays was in the market with a sterling deal this (Thursday) morning.

“I’m just concerned that we might soon see the day when investors are going to say they need to digest the deals so far,” said a syndicate official.

RBS analysts said that demand has been strong so far, but that the heavy supply is putting the secondary market under pressure, with spreads widening across the board except for Spanish and Italian paper.

“The relatively high new issue premiums, which issuers are willing to pay, are taking their toll and our traders have seen better selling in the secondary market,” they said. “So far, the performance of most new issues has been subdued.”

A syndicate official said that this contrasted with the experience in the senior unsecured market, where deals that were priced yesterday (Wednesday) tightened in the secondary market by 5bp on average.

National Australia Bank

NAB is in the market with the second Australian covered bond in as many days, a five year issue that leads Credit Suisse, Deutsche Bank, JP Morgan and NAB have been marketing at the 100bp over mid-swaps area. Order books were officially opened this morning, although the leads announced initial price thoughts of the 100bp over area yesterday afternoon after CBA had launched a Eu1.25bn five year at 100bp over, its first covered bond and the first Australian euro issue.

A syndicate banker away from NAB’s deal said that it seemed to be going OK, but that he did not think that it would go as well as CBA’s. More than Eu1bn of orders were placed for NAB’s issue based on an update from around 1240 CET. The order books were due to be closed at around 1315, with the spread fixed at 100bp over.

A syndicate official on NAB’s deal said that the issuer is mindful of avoiding a repeat of the Australian covered bond experience in the US market in November and that this was informing the way in which the deal is being executed.

“We waited for CBA to launch,” he said. “We didn’t want to announce something while they were bookbuilding because we don’t want the market to fall over in the first week.

“It’s good to see two trades getting done and getting done well.”

ANZ and Westpac in November priced Australia’s first ever covered bonds, tapping the US market with deals that market participants said were poorly executed and which widened in the secondary market.

NAB’s deal closely resembles CBA’s in that it is coming with the same maturity and guidance, with a syndicate official at one of the leads saying that the issuers are very similar and that this is reflected in senior unsecured and CDS levels.

However, he said that NAB is not aiming for a deal bigger than Eu1bn deal because it is focussed on building a curve and would prefer to be able to return to the market sooner than a larger deal would allow given collateral constraints.

Société Générale SFH was the third French issuer to tap the market this week, attracting Eu1.5bn of demand for a 10 year obligations de financement à l’habitat benchmark that leads ABN Amro, BayernLB, Crédit Agricole, UBS and UniCredit will price at 170bp over. Guidance was set at 170bp-175bp.

This compares with pricing of 165bp over for a Crédit Agricole Eu1.5bn 10 year issue that came yesterday, and 160bp over for a Eu2bn 10 year Caisse de Refinancement de l’Habitat deal on Tuesday. A syndicate official suggested SG might not fare as well as the French issuers that came before it, citing a slowing down of inflows of new cash.

A syndicate banker on the deal said that there continued to be good demand at the long end of the curve, and that appetite increased after the end of an auction of French government bonds today.

He said that the covered bond market held up today despite signs of shakiness in the broader market, with stocks down, senior financial credit indices widening and “noise” about Europe.

“People can be glad that the day is over and that tomorrow is a public holiday,” he said.

See separate article for coverage of Barclays’ sterling covered bond.