Société Générale SFH made inroads into its 2014 funding with a well-received Eu1bn no-grow seven year issue yesterday (Monday) and while no new deals were launched this morning, the market was seen as supportive and further French supply cited.

The public deal pipeline in covered bonds is thin as the end of the year approaches, with a debut for ING Belgium and a potential deal for National Bank of Canada in early December the only visible projects at this stage. ING Belgium is on the second day of a roadshow that will finish on Thursday and a deal is likely to be launched next week, depending on market conditions. Barclays, BayernLB, ING, Société Générale and UniCredit are working with the issuer. National Bank of Canada roadshowed earlier this month but is in blackout ahead of the release of its fourth quarter results on 4 December.

Many deals have come at fairly short notice, however, so the deal pipeline is not necessarily a reliable indicator of potential supply. Syndicate bankers said the market is open and supportive, with strong demand available for fairly priced deals. One highlighted further French supply as a distinct possibility for the near future.

The countdown to the market closure for the winter holidays has begun, however, as syndicate bankers note how many weeks are left in which deals can reasonably still be done.

One said that activity will enter holiday slowdown mode from the middle of December, with around two weeks left for issuance. Investors are starting to become more selective, she said, but haven’t yet signalled that they are closing their books.

“The slowdown is more on the side of the issuers,” she added.

Demand exceeding supply has been a theme for much of the year in covered bonds.

Société Générale SFH had already completed its 2013 long term funding programme when it came to the market yesterday with a Eu1bn no-grow seven year obligation de financement à l’habitat (OH) issue, but was taking advantage of year low spreads to complement its OH benchmark curve, according to a syndicate banker at one of the leads – Danske Bank, Mediobanca, Natixis, NordLB, RBS and Société Générale.

He said that the issuer made the decision to tap the market early yesterday morning.

Some Eu2.2bn of orders were placed by 110 investors for the transaction, which was priced at 16bp over mid-swaps, the tight end of guidance of the 18bp over area. Initial price thoughts had been in the 20bp over area, incorporating a new issue premium of around 5bp to the issuer’s interpolated curve, according to the syndicate banker.

Another syndicate official on the deal said that at 16bp over, the premium to French government bonds was 13bp.

An analyst said that SG’s deal shows investor appetite is still “very much alive” despite covered bonds trading at tight levels.

Germany and Austria took 41%, France 15%, the Nordics 15%, the UK and Ireland 10%, Asia 7%, the Benelux 5%, and others 7%. Banks were allocated 42%, fund managers 38%, insurance companies and pension funds 10%, central banks 9%, and others 1%.

The bonds were trading around re-offer this morning, according to one of the lead syndicate officials.

Münchener Hypothekenbank priced a Eu250m retention tap of a 2.5% July 2028 mortgage Pfandbrief yesterday, taking the total issue size to Eu1bn. Leads BayernLB, BNP Paribas, DZ Bank, LBBW, NordLB and WGZ priced the increase at 8bp over mid-swaps.