Banco Popolare of Italy attracted Eu2.3bn of demand for a Eu1bn seven year deal this morning that showed peripheral covered bonds to be in favour, while Helaba has mandated for a five year public sector Pfandbrief after DKD sold a three times oversubscribed Eu500m seven year.

Leads Banca Aletti, Commerzbank, LBBW, Natixis and Mediobanca launched the Banco Popolare Eu1bn seven year trade with initial price thoughts of the low-to-mid 30s over mid-swaps area, before tightening guidance to the 30bp area and setting the re-offer at 28bp.

The final order book totalled over Eu2.3bn with 220 accounts, and only marginal Eurosystem involvement, according to a syndicate official at one of the leads.

“It is an impressive outcome given the issuer is not a national champion,” the lead syndicate official added. “It offers a premium versus those banks, but this is still an attractive level for the issuer.”

He noted that an old three year, March 2017 deal from Banco Popolare was trading at 12bp, mid.

Another syndicate official away from the leads said he believed the deal’s final terms were fixed at the correct end point.

“The Italians are doing well,” he added. “The relative lack of covered bond supply is clearly helping peripherals.”

Dexia Kommunalbank Deutschland (DKD) (pictured) leads Commerzbank, Crédit Agricole, DekaBank, UniCredit and WGZ went out with initial price thoughts of the mid-swaps less mid to low single-digits area for the Eu500m no-grow seven year public sector Pfandbrief. The leads then set guidance at minus 5bp before fixing the re-offer at minus 7bp on the back of a book of more than Eu1.5bn.

A syndicate official at one of the leads estimated the deal offered a new issue premium of 1bp-2bp, considering DKD’s most recent benchmark, a Eu500m five year deal priced in June 2014 at 27bp over mid-swaps that was today trading at minus 13bp, bid.

He also noted that the deal offers a pick-up of around 35bp over the seven year Bund, which was trading at 0.48%.

“This is clearly where the attraction lies for investors, as there is not much differentiation between German Pfandbriefe” he said, noting that the deals eligibility for LCR Level 2A rather than Level 1, due to it only having an A+ rating from S&P, had not had a significant impact.

A syndicate official away from the leads added that the pricing for the deal looked fair, based on a Commerzbank Eu500m seven year Pfandbrief having been priced at mid-swaps minus 10bp on 19 January.

“This was a really nice trade,” he said.

Landesbank Hessen-Thüringen Girozentrale (Heleba) has meanwhile mandated Barclays, Crédit Agricole, Credit Suisse, Deutsche and Helaba to lead manage a five year public sector covered bond that is expected tomorrow (Wednesday). And a syndicate official also said another mandate from a core issuer may be announced this afternoon, ahead of a likely execution tomorrow, subject to market conditions.

Westpac is expected to issue the first US dollar benchmark covered bond of 2015 from Australia today, having mandated Barclays, RBC and Westpac to launch a five year. The issue will be only the second US dollar trade of the year overall, following a Royal Bank of Canada $2bn five year that was priced at 44bp over on 29 January.

Meanwhile, CBPP3 outstandings rose Eu2.785bn in the week to last Friday, according to figures published yesterday (Monday) afternoon, with analysts suggesting the ECB made up for a fall in primary supply with aggressive secondary buying.

Monday’s figure, which includes purchases settled and still outstanding as of Friday, took the holdings of the European Central Bank’s third covered bond purchase programme to Eu48.739bn, up from Eu45.954 at the end of the previous reporting period.

Two CBPP3-eligible deals settled last week, a Eu1bn five year from Compagnie de Financement Foncier and a Eu500m four year from NordLB.

“We estimate that it bought on average Eu490m a day on the secondary market last week, as we pencilled in Eu325m of primary settlements,” said Joost Beaumont, senior fixed income strategist at ABN Amro. “Secondary market activity was in line with the daily purchases in previous weeks.”