The covered bond market showed no signs of losing steam today (Wednesday) as deals for ANZ NZ, DG Hyp and Intesa Sanpaolo hit the market, in spite of a weaker opening to wider markets this morning and with some senior unsecured new issues widening under the weight of supply.

The three deals launched this morning took benchmark covered bond supply this week to Eu8bn via nine issues, while Cajas Rurales Unidas has mandated Barclays, BBVA, Crédit Agricole, and Société Générale for a seven year cédulas tomorrow (Thursday).

The senior unsecured market has been similarly busy since last week, when only one covered bond benchmark was launched, and some new issues – such as deals for Banco Popular Español and National Australia Bank – were today trading weaker, while covered bonds were holding up.

A syndicate official on Intesa Sanpaolo’s covered bond said that the wider market weakness had not been on the back of any particular headlines – although a European Court of Justice ruling this morning on the European Central Bank’s Outright Monetary Transactions (OMT) programme had been in focus. He said that the softness in the senior unsecured market was on the back of better selling since yesterday, with accounts anticipating further supply.

He said that against this backdrop Intesa’s new issue had gone well, also considering that it came amid heavy covered bond and other seven year issuance, with ANZ Bank New Zealand also issuing in seven years today, for example, and Crédit Mutuel-CIC and Banca popolare dell’Emilia Romagna yesterday having sold Eu1bn and Eu750m seven year benchmarks, respectively.

“This continues to show the decent underlying demand from the private side in addition to central banks orders,” said the syndicate official.

Banca IMI, Commerzbank, Crédit Agricole, Danske, HSBC and LBBW went out with initial price thoughts of the mid-swaps plus 30bp area for Intesa’s benchmark, with the lead syndicate official citing as references the issuer’s January 2021s at 17bp, mid, and its December 2022s at 21bp.

After building a book of more than Eu1.5bn comprising over 80 accounts, and following guidance of 25bp-27bp, the leads priced the transaction at 25bp over mid-swaps. The lead syndicate official said that this equated to a new issue premium of around 5bp, which he said was in line with that paid by most other issuers this week.

He also said that Eurosystem participation was in line with recent supply in terms of the order size and percentage. He noted that the CBPP3 order had been placed during the IPT phase, but that – again, as with other deals this week – the Eurosystem did not simply place its order at re-offer but noted that it would be taking less if the level was moved too tight.

Deutsche Genossenschafts-Hypothekenbank (DG Hyp) priced a Eu500m no-grow six year Hypothekenpfandbrief on the back of Eu1.6bn of demand via leads Commerzbank, Deka, DZ, Natixis and WGZ. IPTs were the high single-digits through mid-swaps, guidance was less 12bp-10bp, and the paper was re-offered at 12bp through.

“This went very well,” said a banker at one of the leads. “It took us just an hour to finish bookbuilding.

“Minus 12bp was what the issuer had hoped for. It’s a good trade and a good price.”

DG Hyp has a slightly longer, July 2021 issue outstanding that the lead banker said was bid at minus 18bp, while LBBW priced a four year benchmark at less 16bp on Monday. He said that the outstanding DG Hyp issue implied a theoretical new issue premium, but that with the secondary market illiquid the LBBW comparison was a more useful basis for considering what the appropriate pricing should be.

ANZ Bank New Zealand is pricing a Eu750m seven year benchmark at 19bp over mid-swaps, following IPTs of the low 20s and guidance of the 20bp area. A syndicate official away from the leads said that, with a reported book of Eu1.4bn, the deal appeared to have gone well. He noted that the level was 5bp wider than where Australia’s Westpac priced a seven year last week, and said that this could reflect a mix of the premium offered by New Zealand issuers versus their neighbours or a slightly higher new issue premium.

“All the trades today underline the flamboyant mood of this market,” he added. “People are cash rich and have accepted the fact that while they are not getting anything in return for their investments it’s still better than depositing the money with the ECB or putting it under your mattress.

“This is why all these trades are going so well.”

Bank of Nova Scotia priced the first covered bond of 2015 in the Kangaroo market today (Wednesday), a A$600m five year floating rate note priced at 65bp over three month BBSW, via leads ANZ, BNS, UBS and Westpac.

The deal was announced last Thursday and books were opened yesterday, with guidance of the 65bp area. According to a syndicate banker at one of the leads, this compared with outstanding RBC and TD paper maturing in late 2019 trading at around 59bp over.

He said that Bank of Nova Scotia’s issue was well oversubscribed at pricing today. The final order book size and distribution statistics were not disclosed.

The syndicate banker said that Bank of Nova Scotia’s deal was launched into a busy January primary market in Australian dollars, with issuance having been led by the SSA sector. Supply was mainly in the five and 10 year maturities, with five years proving something of a sweet spot, he added.

“The deal was launched with one eye on what has been a strong start to the Australian dollar market in 2015,” said the syndicate banker, “and making the step within triple-A from SSAs into covered bonds is a natural next move from investors.”

He noted that the strong tone to the market looked set to continue, with Westpac, for example, readying a senior unsecured issue.