UBI Banca tightened pricing on a Eu1bn 10 year benchmark from the high 30s to 30bp over this (Tuesday) morning, while a Eu500m no-grow BNP Paribas Home Loan SFH deal took 10 year covered bonds to a new tight of less 3bp, as CBPP3’s impact showed no signs of abating.

Leads Banca IMI, Barclays, Deutsche, ING, LBBW, Mediobanca and Natixis tightened the level on UBI’s 10 year from the high 30s to the 35bp area, then the 32bp area, and finally to a re-offer of 30bp over. The Eu1bn deal attracted around Eu3bn of orders from some 125 accounts, according to a lead syndicate banker – in line with the book size of most other CBPP3-eligible launched since last Wednesday.

A banker away from the deal said that this was well inside the level of around 37bp bid at which he saw a 10 year issue UBI launched in January, which was then re-offered at 118bp over mid-swaps.

“The peripheral stuff is absolutely flying,” he said.

He expects the UBI issue, building on deals for Credito Emiliano and Banco Sabadell last week, to encourage further supply.

“The more issuance comes, the more issuers are looking,” he said. “If you are from Spain or Italy and want funding then you’d have to be pretty silly not to start looking after this.”

BNP Paribas Home Loan SFH achieved what was seen as a tight level even within the context of CBPP3 for a Eu500m no-grow 10 year benchmark that was executed rapidly this morning. Leads ABN Amro, BNP Paribas, Swedbank went out with guidance of 1bp through mid-swaps and fixed pricing at 3bp through.

“They started aggressively and then saw where they could get to,” said a syndicate official away from the leads.

He said that the re-offer was roughly flat to the issuer’s curve given that its previous longest dated benchmark, a 2021, was bid at about 7bp through mid-swaps and that 4bp for the curve between seven and 10 years seemed reasonable.

He noted that the re-offer was inside where a Eu1bn 10 year Nordea Bank Finland issue was priced last Wednesday, at 1bp over, and trading at today, even though it had tightened to around less 2bp, bid.

He and other bankers away from the leads said the Eu500m no-grow size was key to the pricing, with another saying it helped “enormously”. He also cited the rarity of the BNP Paribas signature and overall lack of 10 year covered bond issuance.

“The interesting thing is that we have seen resistance from French accounts for this kind of paper coming through OATs,” he added, “but this came 10bp-11bp through the November 2024 OAT, so comfortably through the French government curve.

“It seems that people are reassessing fair value in light of CBPP3.”

Settled covered bond purchases under CBPP3 stood at Eu4.779bn as of last Friday, the ECB disclosed yesterday afternoon, a Eu3.075bn increase on the Eu1.704bn amount a week previously. The figure is the first to reflect a full week’s activity, with the previous weekly total – which was the first disclosed by the ECB since the programme began on 20 October – only having corresponded with three days’ activity.

The figure was higher than many market participants had been expecting and much greater than bought at the beginning of the ECB’s two previous purchase programmes. It showed an increase in the rate of buying by the ECB, with the daily average having increased from Eu568m to Eu615m.

“With a daily average of Eu597.375m and no primary market issue included yet, the ECB can clearly claim that CBPP3 is ‘very different’ than CBPP1 and CBPP2,” said Bernd Volk, head of covered bond research at Deutsche Bank. “We expect the ECB to continue to use all channels and counterparties to source covered bonds under CBPP3 and therefore CBPP3 to continue to dominate the covered bond market.”

As with the previous week’s figure, the latest number captures only secondary market purchases because although eligible primary market issuance kicked off last Wednesday, no eligible deals have settled yet. CBPP3 purchases of the aforementioned Nordea Bank Finland Eu1bn 10 year and a Eu750m seven year Credito Emiliano issue launched Thursday should be included in next Monday’s figure as they settle tomorrow (Wednesday) and Thursday, respectively.