BNP Paribas sold a Eu750m 10 year covered bond today (Tuesday), building a twice-subscribed book to enlarge the deal from Eu500m at a minimal new issue concession, and reopening the tenor after euro issuers had over the last month concentrated issuance in shorter maturities.

Leads BNP Paribas, BayernLB, Mediobanca, Nykredit, SG and UBS launched the 10 year deal with initial price thoughts of the 7bp through mid-swaps area. Guidance was then set at minus 9bp before the re-offer was fixed at minus 11bp. Books closed at over Eu1.5bn.

Bankers away from the deal said it appeared to be a good result.

“It’s a nice trade, it looks like it has been very successful,” said a syndicate official, who noted the deal had printed at the same level at which an eight year Eu1bn issue from CAFILL was priced on 16 April.

“That’s a very good outcome,” he added.

Another banker away from the deal, seeing the issuer’s November 2024 paper at minus 10bp, bid, said fair value for the new issue was roughly flat to where it had printed, suggesting the deal offered little, if any, new issue premium.

Another saw the November 2024s at minus 15bp, mid, and estimated fair value to be around minus 14bp.

Meanwhile, one syndicate official away from the deal said the move from IPTs to the final spread was arguably too far.

“It is a big move,” he said, “but then who can say what is too much? Too much is what investors will not accept, and clearly investors were OK with this deal.”

A syndicate official away from the deal also said it was a positive sign that a 10 year euro-denominated deal had gone well, after most issuers had opted for shorter tenors in recent weeks.

On 18 March, demand and pricing on a 10 year issue from Eu1bn CaixaBank fell short of expectations amid wider market weakness, with a Nationwide Eu750m 12 year also affected. Only Banco Popular Español has sold a 10 year euro issue since, a Eu1bn 10 year on 24 March, with the only other longer dated issuance a WL Bank Eu500m 12 year the next day.

“It’s useful we now have a successful 10 year after some recent trades with that tenor struggled, and after most recent supply has been in the fives and sevens,” the syndicate official said. “This could reopen the tenor after some weakness in that sector.”

The syndicate official added that he felt the Eu500m starting point helped the issuer to avoid paying up more for the deal’s longer tenor.

Meanwhile, bankers said that although the market was supportive of new deals, the pipeline remains slim.

“This deal proves we have a supportive market,” said one, “the only issue now is the calendar getting in the way.”

The banker noted there was a window for new deals on Wednesday and Thursday before some jurisdictions mark the May Day bank holiday on Friday, with a public holiday in the UK on the following Monday. Then next week activity could be further slowed by a public holiday in the Netherlands on Tuesday, the UK general election on Thursday and a French public holiday on Friday, he said.

“This is a tricky period,” he added.

Meanwhile, CBPP3 outstandings increased Eu2.946bn last week, up from Eu2.516bn the previous week, with analysts attributing the rise to an increase in primary market settlements.

ECB figures released yesterday (Monday) indicated that purchases settled and outstanding under the third covered bond purchase programme as of Friday increased the Eu2.946bn, taking the total volume from Eu69.666bn to Eu72.612bn.

Analysts noted that the figures were boosted by there having been more primary market deals settling in the relevant reporting period.

Last week four CBPP3-eligible deals settled – three Eu500m issues, from Deutsche Hypothekenbank, La Banque Postale and NIBC, and a Eu500m tap from Heleba – with supply totalling Eu2bn. In the previous reporting period, no primary market deals settled.

“We are thus still waiting for the first signs of the CBPP3 finding it harder to buy bonds in the market,” said Florian Eichert, senior covered bond analyst at Crédit Agricole. “Having peripheral covered bonds trade significantly through their sovereign curves again and French covered bonds very close to their own OAT curve as well as German Pfandbriefe seems to have freed up some bond holdings.”