Banco Sabadell is pricing a Eu1.25bn seven year cédulas today (Friday), having revised the amount upwards from Eu1bn late in the process, with pricing of 25bp over mid-swaps affirming the dramatic effect of CBPP3 on levels. CFF has meanwhile mandated a seven year benchmark.

The Spanish bank announced its issue yesterday (Thursday) after Italy’s Credito Emiliano had priced the first peripheral benchmark since the start of CBPP3 and only the second new benchmark eligible for the programme since it was launched at the start of last week (20 October) – Nordea Bank Finland was first, with a Eu1bn 10 year deal at 1bp over mid-swaps on Wednesday.

Credito Emiliano went out with IPTs of the 30bp area for its seven year and ended up pricing a Eu750m deal at 25bp over on the back of a book of almost Eu3bn (see separate article for full coverage) and Sabadell trod a similar path.

Leads Barclays, Commerzbank, JP Morgan and Lloyds went out with IPTs of the 30bp area and are pricing a Eu1.25bn seven year at 25bp over. According to a banker away from the leads, the size was increased after what had originally been deemed final terms were announced, with the leads reportedly saying that the issuer was responding to demand to increase the size from Eu1bn to Eu1.25bn and that any accounts that wanted to revise their orders in light of this would be able to do so.

“I would assume that not a single account would have jumped ship,” he added.

The book is understood to have been over Eu3bn, in line with Credem’s deal yesterday and Eu3.7bn of demand for Nordea Bank Finland’s on Wednesday.

Eurosystem central banks were said to have been active again, although syndicate bankers said that, after the experience of three CBPP3-eligible deals, their direct participation this week had perhaps been less overwhelming than anticipated.

“It’s not completely crowding out other accounts,” said one. “There is still plenty of room for normal investors, even if the central banks orders are substantial. All-in-all it seems to be professional and balanced.”

Another said that to his understanding central bank participation had been more modest than expectations, and was not the only factor behind the tight levels being achieved.

“It’s just this overall imbalance between supply and demand getting another psychological boost due to the central bank actions,” he said. “They were in, but did not really tip the scales to an enormous extent.”

Sabadell’s level was nevertheless well inside where some market participants saw fair value. The level of 25bp also compares with a spread of 250bp over mid-swaps when Sabadell last sold a benchmark covered bond, a Eu1bn five year in January 2013.

“The frenzy is on,” said the banker. “Nordea at plus 1bp for 10 years, and I understand they lost almost no orders despite starting at plus 6bp. Credem at 25bp for seven years – good grief! And it’s the same with Sabadell”.

Compagnie de Financement Foncier is expected on Monday after having announced a mandate for a seven year benchmark today with leads Barclays, BayernLB, Natixis, Santander and UniCredit. The French issuer is set to become the first to have launched two benchmarks since CBPP3 was announced on 2 September, after the issuer on 9 September sold a Eu1bn five year at 5bp through mid-swaps amid the market’s initial rally on the back of the ECB programme’s announcement.

A syndicate official away from the leads said that deal is now bid at 11bp through mid-swaps and that old, high coupon CFF paper in the seven year part of the curve is all in the mid-single-digits through mid-swaps, leading him to expect pricing of 6bp-5bp through as well. He anticipated that it will be “hilariously oversubscribed”.