New issuance activity in the euro benchmark covered bonds increased today (Tuesday) after what was already a busy start to the week yesterday, with Banco Sabadell, ANZ National, BAWAG, and Axa Bank Europe out with deals in a market bankers said is digesting the heavy supply.

A syndicate banker said that after a “blast” of new issuance across asset classes yesterday (Monday) the primary markets were calmer this morning, with issuance in any case weighted toward corporate supply rather than financials and covered bonds.

“We were expecting a busy week,” he said, “and with the data coming out tomorrow it’s understandable that deals are coming on top of each other.”

Germany’s constitutional court rules on the European Stability Mechanism (ESM) tomorrow (Wednesday), although there have been rumours about whether this could be delayed, while the US Federal Open Markets Committee (FOMC) starts a two day meeting tomorrow.

The syndicate banker said that it also made sense that cédulas issuers followed on from a senior unsecured deal from Banco Santander on Friday to demonstrate market access.

Armin Peter, head of covered bond business and syndicate at UBS, said that the scale and nature of yesterday’s primary market activity brought with it certain issuance dynamics that covered bond market participants should be mindful of.

“If the FIG market and covered bonds have to compete on a busy day against high profile corporate deals or higher yielding senior deals,” he said, “then slower book building, reduced demand and potential less pricing power are realistic issues to consider or be aware of.”

Banco Sabadell is out this morning with a two year issue that Barclays, Commerzbank, Credit Suisse, and Sabadell will price at 375bp over mid-swaps. Order books were due to be closed at 1200 CET, with orders exceeding Eu500m by the time The Covered Bond Report went to press.

A syndicate official away from the leads noted that the deal was going slowly. A lead syndicate banker said that getting a Eu500m deal done was a good result after peripheral markets deteriorated yesterday afternoon, with Spanish sovereign debt around 10bp-15bp wider across the curve.

“Net net it’s a pretty good result,” he said. “The spread on the deal is unchanged despite Spain widening, which is testament to how firm the market is despite all the issuance.”

Sabadell’s deal comes after Banesto, a subsidiary of Banco Santander, yesterday reopened the cédulas benchmark market after around six months without supply from the jurisdiction. The deal, a Eu500m long four year issue, attracted in excess of Eu850m of orders from more than 90 accounts and was priced at 395bp over via Banesto, Crédit Agricole, Commerzbank, Goldman Sachs and UBS.

Around 23% of the Banesto covered bond went to Spanish investors, which the syndicate banker on Sabadell’s deal noted was positive.

ANZ National is out with a long five year that leads ANZ, Barclays, JP Morgan and UBS are marketing at the 45bp over mid-swaps area, following initial price thoughts of the high 40s. Orders are understood to exceed Eu1bn.

A lead syndicate official said that the guidance incorporated a modest new issue concession, citing an outstanding ANZ National October 2016 at 46bp/34bp and a July 2017 issue from ASB Finance Limited, the New Zealand covered bond issuing subsidiary of Commonwealth Bank of Australia, at 45bp/37bp over. That was the last benchmark covered bond from a New Zealand issuer.

A syndicate banker away from the deal said it was coming flat to secondaries “at best”.

“But anything with a reasonable handle on it in terms of the mid-swap spead is being absorbed,” he said. “Supply seems well digested. There’s enough cash out there.”

Austria’s Bawag is out with a seven year Eu500m no-grow mortgage backed seven year deal, with leads Deutsche Bank, DZ Bank, Erste, Goldman Sachs and RBS having built a book of more than Eu800m of orders before they were due to close at 1200 CET. Guidance was revised from the 57bp over area to 55bp-57bp over.

HYPO NOE Gruppe Bank of Austria yesterday priced a Eu500m no-grow seven year publc sector backed issue at 32bp over mid-swaps.

Axa Bank Europe SCF is also in the market, with leads BNP Paribas, Crédit Agricole, Commerzbank, ING, Natixis and RBS taking orders for a Eu500m no-grow seven year issue on the basis of guidance of the 52bp over area.

A lead syndicate official said the deal was working well, with orders in excess of Eu600m by the time The Covered Bond Report went to press.