Four issuers hit the five to six year part of the euro covered bond market today (Tuesday), with Swedbank enjoying a strong result but trades from Westpac NZ and Caja Rural de Castilla-La Mancha said to have struggled to stand out from a crowd that also included Bawag PSK.

Swedbank Hypotek leads Danske, Deutsche, SG, Swedbank and UBS launched the Swedish issuer’s Eu1.25bn five year deal with initial price thoughts of the mid-swaps plus 10bp area, moving to guidance of the 8bp area having gathered orders of over Eu1.3bn. The spread was set at 7bp before books closed at Eu1.6bn.

“It is a fantastic result,” said a syndicate official at one of the leads. “At Eu1.6bn, the final order book, without the support of the ECB, is one of the biggest we have seen for a while.”

Syndicate officials away from the deal agreed the deal was one of the day’s strongest results.

“It went very smoothly in what is a tough market,” said one, “but that is not too surprising given the quality of the name and the attractive IPTs.”

The lead syndicate official said fair value for the new issue was around flat to mid-swaps, based on the issuer’s secondary curve.

Syndicate officials noted that the deal came substantially wider than recent deals from Swedish peers, with SEB having priced a Eu1bn seven year at 3bp through mid-swaps on 9 June, but they said this was to be expected given market conditions.

“That shows just how much spreads have moved for the Swedes,” said one. “If you compare this to RBC’s recent five year, which is also CBPP3-ineligible and came at 9bp in a better market at the start of the month, it looks more favourable.

“However, outside of Swedbank’s trade,” he added, “things look tougher today.”

Bawag PSK’s Eu500m no-grow five year mortgage covered bond was priced at 12bp over, after leads Barclays, DZ, ING, SG and UniCredit launched the deal with IPTs of the 15bp area.

Syndicate officials away from the deal said the outcome was respectable, noting that the leads had gathered good momentum to tighten the spread.

“For an Austrian name, with all that jurisdiction’s recent troubles, a book of that size is a good outcome,” added one.

Westpac NZ leads BNP Paribas, UBS, Westpac launched the Eu500m five year issue with IPTs of the low 20s, moving to guidance of the 22bp area before the re-offer was fixed at 22bp. The size of the order book was not disclosed when The CBR went to press.

Some syndicate officials away from the deal suggested that the deal had been well priced, but found less demand than competing deals on a busy day because of a lack of natural buyers and liquidity in paper from New Zealand.

“It looks like they have been unlucky, as the pricing was fair,” said one.

Another syndicate official however, calculating the new issue premium to be 7bp, said the spread was not attractive enough to stand out.

“On such a crowded day, when you might not have the cash to buy five trades, I can see why this one would be the one you miss,” he said.

Caja Rural de Castilla-La Mancha went out late with its Eu500m six year covered bond debut. Leads Banco Cooperativo, HSBC, JP Morgan, Natixis and Santander announced IPTs of the mid-40s, before fixing the re-offer at 45bp on the back of orders approaching Eu500m. The books were still open at the time The CBR went to press.

Syndicate officials away from the leads said the pricing looked generous, offering a 20bp pick-up versus the curve of Banco Popular Español, for example, but suggested the leads had struggled to gain traction due to competing supply.

“It’s not really their fault for coming to the market on such a busy day,” said one. “They had already committed themselves by announcing their mandate yesterday and they were just unfortunate that ABN Amro and Swedbank came out over the top of them.”

In spite of the challenges faced by some of today’s deals, syndicate officials said that further supply is expected this week – with Hypo Tirol and ING Belgium concluding roadshows tomorrow (Wednesday) and other issuers said to be eyeing the market.

“It’s a mixed bag of results, but in general I think today was a relatively good day for the market,” said one. “After last week there was the fear that momentum would slow further, but results like Swedbank’s, ABN Amro’s and even Bawag’s show that liquidity is out there at the right price.

“This market leaves some opportunities.”