The euro benchmark covered bond market burst into action with four new issues today (Wednesday) after a decisive interest rate hike by Turkey’s central bank boosted sentiment, with higher yielding UBI Banca and Intesa Sanpaolo OBGs the most sought after.

Commerzbank, Crédit Mutuel-CIC Home Loan SFH, and UBI Banca were all out early this morning with new transactions, the German and French issuers with five year deals and the Italian with a 10 year, with Intesa Sanpaolo joining the market a little later to add to the flurry of supply via a 12 year obbligazioni bancarie garantite (OBG) issue.

The issuance surge makes today the busiest day in the primary market for euro covered bonds since 8 January, when four new deals were priced. Covered bonds have taken centre stage this week in the financial institutions market, with a Eu500m no-grow three year public sector Pfandbrief for WL Bank yesterday (Tuesday) the first FIG new issue of the week.

Concerns about developments in emerging markets had contributed to a deterioration in broader market conditions late last week and early this week, with a decision on further tapering by the Federal Open Market Committee (FOMC), which concludes a two-day meeting today, also said to be on market participants’ minds.

However, markets bounced back after a surprise sharp hike in interest rates decided by the Turkish central bank yesterday.

“It was a shot in the arm,” said a syndicate official. “It’s good to see the peripherals back in action, and interesting that they’re doing covered bonds after senior a couple of weeks ago.”

He attributed to this to sequencing and senior unsecured funding costs having increased compared with earlier this month.

Another syndicate banker said that markets opened strongly this morning in response to the interest rate move in Turkey, and that covered bonds, as the “better quality” funding instrument available to banks, were a natural focus for the market’s reopening.

A Eu1bn 10 year OBG for UBI Banca that will be priced at 118bp over mid-swaps was the pick of today’s new issues, drawing some Eu5bn of demand (pre-reconciliation), with Commerzbank at the other end of the spread spectrum pricing a Eu500m no-grow five year public sector Pfandbrief at flat to mid-swaps on the back of an order book in excess of Eu500m.

UBI leads Barclays, Crédit Agricole, Goldman Sachs, Natixis, Société Générale and UniCredit set initial price thoughts at the 130bp over area and then guidance at the 120bp over area before fixing the spread at 118bp over.

After reconciliation the order book will probably stand at around Eu4.5bn, according to a lead syndicate official, noting that the order books were only open for around one hour.

He said that the re-offer spread of 118bp over was “pretty impressive”, incorporating a relatively minimal new issue premium of some 3bp, with the yield pick-up rather than the credit pick-up increasingly the decisive factor for investors when it comes to long dated issuance.

A re-offer yield in excess of 3% is “a big boon”, he added.

In the case of UBI, investors were getting some 45bp on the swap curve and 10bp on the credit curve, he said, citing outstanding UBI seven year OBGs at around 105bp over mid.

Intesa Sanpaolo also met with strong demand, with leads Banca IMI, Barclays, HSBC, SG and UniCredit building an order book of some Eu2.3bn for a Eu1.25bn 12 year OBG. The deal is the longest dated euro benchmark covered bond this year and Intesa’s first new issue since September, when it had to downsize a five year deal to Eu750m.

Its 12 year OBG will be priced at 108bp over mid-swaps, following guidance of the 115bp over area.

France’s CM-CIC Home Loan SFH also fared well today, and will price the largest of today’s new issues, a Eu1.5bn five year obligations de financement de l’habitat (OH) issue.

Leads BNP Paribas, Citi, Danske and Natixis gathered around Eu2.1bn of orders for the deal and will price it at 14bp over, after guidance of 15bp-17bp over.

“It went well,” said a lead syndicate official. “At 15bp over it would have been a good deal and 14bp it’s a very good deal.

He said that CM-CIC outstanding bonds put fair value for a new five year at 7bp-8bp, and that the commensurate new issue premium, of 6bp-7bp, was in line with concessions paid by other issuers this year, or at least not larger.

Commerzbank, meanwhile, met with weaker demand for a Eu500m no-grow five year public sector Pfandbrief, which leads Banca IMI, Commerzbank, NAB, Natixis and UniCredit priced at mid-swaps flat on the back of an order book in excess of Eu500m. The re-offer spread was in line with initial price thoughts and guidance.

The deal comes as Commerzbank has been meeting with investors about its SME backed structured covered bonds ahead of a possible second issue off the programme.

German peer Westfälische Landschafts Bodenkreditbank (WL Bank) yesterday sold a Eu500m three year public sector Pfandbrief at 11bp through mid-swaps on the back of some Eu850m of demand.