Belfius, BPCE and MünchenerHyp launched 10 year covered bonds this (Monday) morning and Berlin Hyp a five year, and further deals are expected this week, making for the busiest day in the market since the end of January despite coupons falling to record lows.

A syndicate official away from all of today’s deals said he was pleased with how they had all performed. He added that the rising troubles in Iraq appeared to have had little impact on the markets, with sentiment still strong.

The last time four euro benchmarks were launched on the same day was 29 January when CM-CIC, Commerzbank, Intesa Sanpaolo and UBI Banca tapped the market.

Another syndicate banker said that he expects further issuance this week, despite it being shortened by a public holiday across parts of Germany on Thursday.

“I think we will see at least two more deals this week,” he said. “I am aware of an issuer that will mandate tomorrow, with the transaction likely to be Wednesday’s business.”

Berlin Hyp came with a Eu750m five year deal, which leads Commerzbank, Crédit Agricole, Deka, LBBW and NordLB are pricing at 1bp over. The leads went out with IPTs in the low-mid single digits, then set guidance at 2bp over plus or minus 1bp, with orders in excess of Eu1bn. The final book size was Eu1.2bn.

A syndicate official on the deal said that there were no specific comparables, but noted that a BerlinHyp February 2018 was trading at 5bp through mid-swaps.

“If you factor in 2bp-3bp for each year of the curve, at 1bp over there would be a small new issue premium,” he said.

Another lead syndicate official said that the guidance was chosen with pricing of mid-swaps flat, particularly for a Eu750m size, considered to be off the table.

The Berlin Hyp mandate was announced on Friday afternoon and the lead syndicate official said that, aware further supply was in the pipeline, they had been keen to get into the market first. He said that even if the other supply was set to be coming in longer maturities, it would nevertheless represent competition, particularly with yields being so low.

MünchenerHyp (pictured) leads BayernLB, DZ Bank, Helaba, HSBC, UniCredit and WGZ initially marketed the deal at 8bp-10bp over mid-swaps, before setting guidance at the 8bp over area, with indications of interest (IOIs) in excess of Eu500m. The spread was then fixed at 7bp over, and the size set at Eu500m, with the leads having collected more than Eu600m of orders.

A syndicate official away from the leads said that the IPTs would have been a bit aggressive had MünchenerHyp been seeking a Eu1bn trade, but that the ultimate 7bp over spread was OK given that only Eu500m was being issued. A syndicate official at one of the leads said that the issuer had the choice of prioritising size or price, and opted for a smaller issue with the tighter pricing.

Claudia Bärdges-Koch, deputy head of treasury at MünchenerHyp, said that the issuer has limited funding needs this year. The German issuer last came to market in October 2013, with a Eu625m five year deal.

“In 2014, even if we do the same volume of new business – which is running quite well – we have just 40% of the maturities that we had in 2013, so things are a bit more relaxed. We were not seen in the first quarter, for instance, which is not typical for MünchenerHyp, but there is more to come in the second half of the year.”

For comparables, the lead syndicate official said that to assess fair value the leads looked at a MünchenerHyp July 2022, today trading 1bp through mid-swaps, and a BayernLB July 2022, also trading at 1bp through, and a BayernLB April 2024, at 6bp over.

“We felt that the deal should price in line with BayernLB’s 2024,” he said. “At 7bp over, this represents a limited to no new issue premium.”

Bärdges-Koch said that the book would even have been good for 6bp over.

“The floor for one large fund manager, for example, was 5bp,” she said. “So we didn’t exaggerate the pricing – particularly when the spread to KfW in 10 years, for example, is just 5bp – you don’t want to risk annoying investors.

“It’s give and take, and we like to leave something on the table for investors.”

Another syndicate official on the deal said that it was “an excellent result, with very good accounts and a strong order book”, and added that MünchenerHyp has achieved the lowest ever coupon for a 10 year euro benchmark covered bond. The coupon was 1.5%. This record was briefly held by Deutsche Kreditbank, which last week priced a 10 year Pfandbrief with a coupon of 1.625%.

“It was especially impressive given the number of deals in the market,” said the syndicate official.

Bärdges-Koch said that on the one hand the competing supply did not make life easy, but on the other the market clearly had capacity for the supply.

“We expected there to be quite some traffic this week,” she said. “We were aware that it would mean that there would be two German issues and two deals in the same tenor – and then that Belfius, which had been expected for tomorrow, was also about to go.

“But when we heard that the other books were running quite well we decided to go as well, because there is definitely enough liquidity in the market for more of us.”

BPCE leads Banca IMI, BayernLB, BNP Paribas, Natixis and NordLB set IPTs at the 30bp over area for the issuer’s second deal of the year, following a Eu500m November 2023 priced at 30bp over in February. Having collected more than Eu1bn of IOIs, they went out with guidance of 28bp over plus or minus 1bp, before setting the spread at 27bp over and the size at Eu750m with orders in excess of Eu1.7bn.

A syndicate official at one of the leads said that they were hoping to price in line with a level of 26bp over achieved by a CM-CIC Eu1bn 10 year deal, issued last week.

“We are very pleased with this transaction,” he said. “We accrued more than Eu1.7bn of orders, across 80 accounts, and at 27bp over there is little to no new issue premium.”

Another syndicate official at one of the leads said that for comparables the leads using a BPCE November 2023 trading at 22bp over, the CM-CIC June 2024, today at 25bp over, a Société Générale April 2024 at 21bp over, and a Crédit Agricole July 2025 at 22bp over.

A syndicate official away from the leads said that the pricing looked fair, being in line with where CM-CIC had come last week.

The third issuer to opt for the 10 year maturity, making it the sixth in June to have done so, was Belfius, which announced this morning that it would issue a 10 year euro benchmark, with leads Barclays, BBVA, Belfius, BNP Paribas, NordLB and WGZ Bank going out with IPTs of the high 20s over area.

Guidance was set at the 26bp over area, with more than Eu700m of orders collected, before the spread was revised and fixed at 25bp over and the deal set at Eu500m no-grow.

Syndicate officials away from the leads said that the deal appeared to have gone well, with the issuer having to give little away. One syndicate official added that it did not appear that the deal had been affected by the other covered bonds out in that maturity.