A Eu500m no-grow 10 year Pfandbrief for Sparkasse KölnBonn attracted some Eu1.8bn of demand at mid-swaps flat this (Tuesday) morning, while CIBC has mandated banks for a five year euro-denominated benchmark that is expected to be tomorrow’s business.

Canadian Imperial Bank of Commerce named CIBC, Commerzbank, HSBC, Natixis and RBS as leads for its forthcoming issue. The issuer’s last euro benchmark was a Eu1bn five year priced at 9bp over mid-swaps in July 2013. The last Canadian euro benchmark was a Eu1.5bn seven year for Bank of Nova Scotia that was priced at 4bp over mid-swaps on 10 September.

On Sparkasse KölnBonn’s mortgage Pfandbrief today, leads DekaBank, Helaba, HSBC, LBBW and UniCredit went out with initial price thoughts of the low to mid-single-digits over mid-swaps for the Eu500m no-grow 10 year deal and, after garnering some Eu1.3bn of indications of interest, opened books at guidance of the 1bp over mid-swaps area (plus or minus 1bp). The spread was then fixed at mid-swaps flat, with nearly Eu1.8bn of orders, excluding joint lead manager interest of some Eu200,000, with around 90 accounts involved, according to a syndicate official at one of the leads.

A syndicate official away from the leads described the German transaction as “a decent trade”.

The lead syndicate official said that the pricing was flat to secondaries, with a Sparkasse KölnBonn April 2020 issue quoted at minus 6bp, mid, meaning that fair value for a new 10 year was mid-swaps flat. He said that there was only very low spread sensitivity in the book, with only a few accounts limited at plus 1bp.

“So we could easily have priced sub-mid-swaps,” he added, “but it was the issuer’s decision not to squeeze investors who had participated in its roadshow.”

The issuer held a roadshow ahead of the new issue, which is its first since April 2013 when it launched its first benchmark covered bond since 2008.

The syndicate official said that Sparkasse KölnBonn had chosen the 10 year maturity because it fitted its ALM needs, and also because of the tight levels achievable in the long maturity, as demonstrated by a Eu600m 10 year WL Bank mortgage Pfandbrief launched on 11 September. He added that, thanks to the strong technical bid supporting covered bonds, Sparkasse KölnBonn had narrowed its spread differential to a name like WL Bank, which it had previously traded wider of in the past. He said that the WL Bank issue was now trading at around 4bp through mid-swaps.

Demand was predominantly from Germany and Austria, according to the syndicate official, although he said that the non-domestic bid was larger than for some German issuance. Banks drove the transaction, he added, although there was also good participation from central banks and asset managers.