Aktia and UniCredit Bank Austria launched new covered bonds today (Monday), with bankers noting that the deals generated good interest in a strong market, although the leads on UniCredit’s – the latest in a burst of capital markets activity from the banking group – were initially cautious.

UniCredit Bank Austria leads BayernLB, DZ Bank, ING, Nykredit Markets and UniCredit built an order book of Eu900m for a Eu500m no-grow five-and-a-half year mortgage Pfandbrief. IPTs had been set at the mid to high 20s and guidance then at 25bp over on the back of Eu700m indications of interest. More than Eu900m of orders were in the final book and the leads tightened the level to a re-offer spread of 23bp over.

A syndicate official at one of the leads said he was happy with the way the new issue had gone, adding that the final spread showed that it had been well received by investors.

A syndicate official away from the deal said that the leads had been “unnecessarily cautious” by setting IPTs in the high 20s, but added that he felt that they had ultimately done well, being able to price the deal through 25bp over.

The lead syndicate banker said the market this morning was a little bit softer than last week.

“If markets are softer, you always have to be a touch more cautious,” he said. “However, initially playing it defensively is not such a bad thing as you can fine-tune as the deal progresses.”

This is the fourth benchmark from the UniCredit group in less than a fortnight, coming after, in reverse order, a Eu1.25bn three year senior unsecured floating rate note for the Italian parent, a Eu500m 10 year German Pfandbrief for UniCredit Bank AG, and an inaugural Additional Tier 1 for UniCredit SpA on 27 March.

Another syndicate official away from the deal said he was also impressed with today’s deal for the Austrian subsidiary.

“UniCredit is often out in the market, and as such is not likely to get the huge order books that some issuers attract,” he said. “Additionally, being an Austrian bank, together with the difficulties being faced by Hypo Alpe Adria (HAA), brings its own problems.”

A syndicate official on the Bank Austria deal said that today’s issuance had been unaffected by the uncertainties around HAA.

Hypo Alpe Adria was nationalised by the Austrian government in 2009 to avoid a collapse of the bank in the wake of the financial crisis and there had been uncertainty about its future recently, with speculation that the Austrian government might cease its backing and let the bank go insolvent.

However, the Austrian government on 22 March announced that it will transfer HAA to a state-owned holding company, confirming previous comments that it would not pursue insolvency proceedings. Moody’s on Friday said that the plan will reduce the risk of asset fire-sales, which is credit positive for HAA’s covered bonds.

Moody’s this morning also affirmed the Aa1 rating of UniCredt Bank Austria’s mortgage-backed covered bonds, concluding a review for downgrade initiated on 24 March.

For Finland’s Aktia Bank, leads Commerzbank, JP Morgan, LBBW and Nordea collected over Eu1bn of orders for a Eu500m five year deal, and fixed the spread at 8bp over mid-swaps after initial price thoughts of 10bp-12bp over.

A syndicate official at one of the leads said the pricing included a new issue premium of 2bp, and noted that recent covered bonds from Nordic issuers had performed well on the secondary market.

A Stadshypotek Eu1.25bn five year, which became the joint tightest post-crisis non-German euro benchmark covered bond when it was priced at 5bp over on 25 March, was today trading at 4bp over, according to the syndicate official.

“This was a good, solid transaction, with a lot of diversification,” he said of today’s deal for Aktia. “The issuer had to provide a little bit of a new issue premium, but this was worth it to attract the investors.”

The Finnish issuer concluded a series of investor meetings last week, which ran from 25 March until Thursday. A syndicate official away from the leads said he was surprised that it had not issued last week, but added that both today’s deals were “excellent transactions”.

“The market is still in amazing shape, and it appears very easy to issue without fear,” he said, adding that renewed tensions in eastern Ukraine over the weekend did not seem to be affecting the covered bond market.

Another syndicate official said the market was in good shape and that there were no barriers to entry.