ANZ is launching a five year dollar benchmark today (Tuesday) after Abbey met with a subdued reception to a £500m three year FRN and Ålandsbanken revived euro issuance, albeit in sub-benchmark format.

Ålandsbanken leads Commerzbank and Nordea launched the Eu250m no-grow issue with initial price thoughts of the 10bp area before moving to guidance of 9bp, which was maintained for the re-offer. Books were closed with orders approaching Eu300m, from 20 accounts.

Syndicate officials away from the leads said the pricing appeared to be generous, but noted that issuers would likely have to pay higher than normal premiums on new issues after the euro market had remained effectively closed since 29 April on the back of wider volatility.

“This is a sub-benchmark and a bit of a special case, but for a Finnish five year to even come above mid-swaps is generous,” said one banker. “But then it is understandable to be cautious in these times.

“There is so much uncertainty still that investors expect more than the usual 1bp or 2bp new issue premium.”

A syndicate official at one of the leads, noting that most outstanding benchmarks from fellow Finnish issuers were trading at minus double-digits, estimated that the new issue offered a 5bp-6bp premium.

“But this deal’s size rules out a big chunk of the investor base, and given the size of the issuer this is exactly what we should have expected,” he said.

“This is a nice little trade, and on a day like today we couldn’t have hoped for a better result.”

Abbey National Treasury Services leads BNP Paribas, HSBC, RBC and Santander printed the £500m (Eu689m) three year FRN at 22bp over three month Libor, in the middle of initial price thoughts and guidance, after having gathered orders of over £500m.

Syndicate officials away from the deal said execution had appeared slow.

“They got the starting point right at 22bp, but it looks like there wasn’t a great depth of demand there today,” said one.

Another agreed, suggesting the quantity of recent covered bond supply from Abbey, Santander’s UK subsidiary, might have put some accounts off.

“There has been a huge amount of supply from Abbey in the last year,” he said, “and the sterling FRN market has been tapped heavily, too.”

Nationwide Building Society printed the last sterling benchmark on 20 April, a £750m three year priced at 20bp over three month Libor.

Seeing 2018 paper from both Nationwide and Lloyds trading at 19bp, bid, a syndicate official at one of the leads said the deal offered a 3bp new issue premium.

A banker away from the deal estimated the final spread to be equivalent to a spread of mid-swaps minus 10bp in euros and noted that the issuer’s January 2018 paper – a Eu700m seven year issue – was quoted at minus 3bp, bid.

“There is definitely some arbitrage there,” he said. “That is a good result for them.”

Meanwhile, ANZ is out with a five year US dollar 144A benchmark covered bond. Leads ANZ, Goldman Sachs, HSBC and RBC have set IPTs at the mid-swaps plus high 30s to 40bp area.

The most recent US dollar benchmark from an Australian issuer was a $1.5bn (Eu1.32bn, A$1.87bn) five year issue from Westpac, which was priced at 41bp over mid-swaps on 24 February, while the last benchmark covered bond in the currency was a $1bn five year for Swedbank Hypotek at 37bp over on 6 May, although that was Reg S only.

Bankers suggested that other issuers might join ANZ and Abbey in tapping currencies other than euros, while the market still awaits the first euro benchmark of the month.

One syndicate official noted that the swap spread between dollars and euros, having tightened from 35bp to 27bp in recent days, was supportive for dollar issuance, adding that European issuers were considering such deals.

“There is an opportunity there for Germans and the Nordics to fund themselves in the shorter maturities,” he said. “There are issuers looking.”

However, another banker said that conditions in the euro market had improved after the ECB yesterday announced it would increase the pace of its asset purchase programmes. He noted that the 10 year Bund yield had today fallen from 0.65% to a low of 0.56%, later rising to 0.60%, while equities were up by 2%.

“It is still not ideal for issuers and investors for rates to be moving by 10bp or so through the day but it is better now the moves are in a positive direction,” he said.

Another banker agreed.

“The euro market is open,” he said, “it is just a matter of picking what name, what tenor and what price to put on the screens.”