Aareal Bank has replenished the pipeline for next week’s business in euro benchmark covered bonds, announcing plans for a five year issue, while another mandate may be announced this afternoon as syndicate bankers remain positive about the state of the market.

Nine deals totalling Eu8.5bn were priced in three days this week in euro covered bonds, a good chunk more than supply in the first full working week of 2013, with the senior unsecured market also very busy. Unlike in covered bonds, new issuance is continuing in the senior unsecured market today (Friday), with Spain’s BBVA selling a Eu1bn five year deal at 118bp over mid-swaps and Santander Consumer Finance out with a two year transaction at 93bp over.

Core issuance outweighed that from the periphery in the euro covered bond market this week, counting seven – from Australia (2), France (2), Finland, Norway, and Switzerland – versus two from Spain’s Banco Mare Nostrum and Portugal’s Caixa Geral de Depósitos.

Peripheral supply was nevertheless the standout success this week, drawing large order books from yield-seeking investors, with demand for deals from core issuers modest by comparison. Syndicate officials did not suggest this was cause for concern, however, saying that tight levels are limiting the degree of oversubscription for core supply.

The expectation is for supply to continue next week at a decent clip, with the first round of issuance having gone well.

“It’s developing nicely,” said a syndicate official. “Levels are well bid in secondary and there are a decent number of candidates for next week.”

Another said that primary market activity had got off to a fairly “benign” start and that he expects next week to be busy, albeit perhaps slightly less so than this week.

Aareal Bank could lead issuance next week, having today announced the mandate for a five year mortgage Pfandbrief, awarded to Dekabank, DZ Bank, HSBC, LBBW and UniCredit, while another mandate was expected to be announced this afternoon.

Sparebanken Vest Boligkreditt was one of three issuers in the market yesterday (Thursday), alongside Commonwealth Bank of Australia (CBA) and Credit Suisse, and Egil Mokleiv, managing director at the Norwegian issuer, said that a positive start to new issuance in 2014 encouraged the issuer to make its move this week, with an early year transaction planned for some time.

“Investors seemed quite ready to invest so we found no reason to wait and just had to find the right day,” he said. “It seems to have worked out and we are happy with that.

“The spread is quite satisfactory and we are glad to see that it is possible to place a Eu500m no-grow in a hectic market at quite a good margin.”

Leads Commerzbank, HSBC, Nordea and UniCredit priced the deal at 10bp over, the tight end of guidance of 10bp-12bp over, on the back of an order book of more than Eu850m. (See below for distribution statistics.)

Credit Suisse, meanwhile, priced a Eu1.25bn seven year at 13bp over and CBA a Eu1bn five year at 18bp over. Both transactions came at the tight end of guidance, with around Eu1.5bn of orders for Credit Suisse’s deal and Eu1.3bn for CBA’s.

Distribution statistics:

Sparebanken Vest Boligkreditt Eu500m 1.25% January 16 2019

More than 60 accounts took part. Germany took 44%, Nordics 24%, Benelux 10%, central and eastern Europe 8%, Austria 5%, Switzerland 3%, Asia 3%, and others 3%.

Banks were allocated 54%, central banks and agencies 28%, funds and insurance companies 14%, and corporates 4%.

Credit Suisse Eu1.25bn 1.75% 15 January 2021

Germany & Austria 56%, Benelux 13%, UK & Ireland 10%, France 7%, Nordics 7%, Italy 2%, Switzerland 2%, Asia 2%, Others 1%.

Banks 51%, Asset managers 38%, insurance companies & pension funds 7%, central banks & official inst. 3%, other 1%.

Final CBA distribution statistics were not available at the time of writing.