Banco Popular Español, BayernLB and NIBC launched euro benchmarks this (Tuesday) morning as covered bonds led FIG flow supply into April with a variety of offerings, including peripheral, long dated, and the second conditional pass-through supply, and a new mandate is expected soon.

Leads Banco Popular Español (BPE), Citi, Deutsche Bank, Morgan Stanley, Santander, and UBS collected more than Eu2.25bn of orders for BPE’s Eu1bn five-and-a-half year covered bond. Initial price thoughts (IPTs) were 125bp over mid-swaps, before the pricing was revised to guidance of 115bp-120bp over, with the spread then fixed at 115bp over.

The Spanish issuer’s last euro benchmark covered bond was a Eu750m four year issued in September 2013 and priced at 240bp over.

A syndicate official on the deal said that to gauge fair value they had used a Eu500m January 2019 BPE issue, which was trading this morning at 113bp over, having been priced at 270bp over when launched in January 2013.

“Considering this outstanding maturity, we would put the new issue premium on this deal at close to flat,” he said.

A syndicate official away from the leads described the market as very constructive.

“Two of today’s trades came as a surprise to me,” he said. “NIBC has been on the road, so it was obvious that it would be announcing soon.

“But BPE was totally unexpected and BayernLB was long-awaited, but again, certainly not expected today.”

Bayerische Landesbank is pricing a Eu500m no-grow 10 year at 8bp over after guidance of the 9bp over area and IPTs of the 10bp over area. Lead managers Barclays, BayernLB, Crédit Agricole, DZ Bank and UniCredit fixed the spread at 8bp over after collecting over Eu1.1bn of orders across more than 70 accounts.

A syndicate official on the deal put the new issue premium at 3bp, seeing their secondary curve at 5bp over in the 10 year maturity.

“We learnt in the first quarter that peripherals are heavily oversubscribed, but German Pfandbriefe continue to be bought and sold,” he said. “Unsurprisingly, the bulk of this interest came from within Germany.

“The deal was more than twice oversubscribed and we are happy with the outcome.”

NIBC returned this morning with its second conditional pass-through, a Eu500m five year no-grow.

Leads JP Morgan, LBBW, NIBC, RBS, and Société Générale opened books with IPTs in the high 30s, and set guidance at the 35bp over area before fixing the spread at 33bp over. They collected more than Eu1.5bn of orders.

A syndicate banker on the deal put the new issue premium at 3bp.

“If you look at NIBC’s first conditional pass-through, that is trading at 27bp-28bp over,” he said. “So taking this into account, and the curve, that leaves 3bp for a new issue premium.”

NIBC issued its first euro benchmark under a new conditional pass-through programme in October, a Eu500m five year, which was priced at 50bp over.

The syndicate banker added that short notice had been given for “the go-ahead”, with the mandate announced yesterday, although a deal had been expected given that the Dutch bank finished a roadshow last Thursday.

“The covered bond market is very resilient,” he said. “The proof of that is today, with all these deals getting done, BPE coming out with no new issue premium.

“It’s a strong market.”

A syndicate banker said that an issuer was set to announce a euro benchmark mandate later today. As with BayernLB, which announced the mandate for today’s issuance yesterday, the leads will not be taking IOIs or IPTs this afternoon, according to the syndicate official, who added that the deal will be from a core jurisdiction.