Demand for euro benchmark issues from Berlin Hyp and Cajamar today (Thursday) showed that investors are increasingly willing to participate in new deals, according to bankers, as the German issuer sold a Eu500m five year and the Spanish a Eu750m BBB+ rated seven year.

The two new issues came after syndicate officials had questioned investors’ appetite for new paper after heavy supply in the first two days of the week, with five deals totalling Eu4.75bn, was followed by a relatively quiet day yesterday (Wednesday), with a sub-benchmark issue from Sparkasse Pforzheim Calw the only euro deal.

Berlin Hyp leads Commerzbank, Deka, HSBC and UniCredit launched the Eu500m no-grow five year Pfandbrief with guidance of the 8bp through mid-swaps stage, skipping initial price thoughts. The leads at 10:00 CET fixed the re-offer at 10bp through having gathered Eu1bn of orders, before closing books at 10:15.

Syndicate officials said it was a positive sign that the deal had progressed quickly and found more traction for spread movement than the last five year German Pfandbrief, a Eu500m deal from UniCredit on 24 September that was priced at 9bp through mid-swaps, in the middle of IPTs and guidance.

They also noted that Berlin Hyp’s issue was priced at the same spread as a MünchenerHyp Eu500m long six year on Tuesday of last week (6 October) but built substantially larger books, with MünchenerHyp taking orders of above Eu600m.

“It’s particularly encouraging that oversubscription levels seem to have picked up, which we have also seen in trades from other regions this week,” said one. “There’s still a pick up to pay versus secondaries, even for German names, but there’s certainly more willingness from investors to participate in new issues.”

Syndicate officials away from the leads said fair value for new issue was around minus 14bp, based on Berlin Hyp’s secondary curve.

The deal is Berlin Hyp’s third euro benchmark covered bond of the year following two Eu500m deals, the first a seven year inaugural green covered bond in April and the second a three year issue in July.

Caja Rurales Unidas (Cajamar Caja Rural or CRU) leads Deutsche, JP Morgan, Natixis, Nomura and Santander priced the Eu750m five year issue at 80bp over mid-swaps, in the middle of IPTs and guidance of the 80bp area. The books closed at Eu850m.

“Overall this is a decent result and looks to have gone pretty steadily,” said a syndicate official away from the leads. “Cajamar isn’t the best rated credit out there and this shows that investors are willing to put their money to work in peripheral deals.”

The new issuance is expected to be rated BBB+ by S&P.

The deal is the second benchmark cédulas from Caja Rurales Unidas this year, following a Eu750m seven year that was priced at 90bp in January.

Syndicate officials away from the leads said the deal offered a new issue premium of around 18bp based on the issuer’s secondaries, seeing Caja Rurales Unidas November 2018s trading at 50bp, bid, and the January 2022s at 70bp.

“That premium is towards the upper end of what we’ve seen recently but it is one of the lower rated covered bonds, so that seems sensible,” said a syndicate official away from the leads.

The syndicate official said that the premium was only slightly larger than that paid by the last peripheral deal, a Eu750m five year from Bank of Ireland on Monday that was seen as paying a pick up of around 15bp over secondaries.

“It might sound a lot but it’s nothing dramatic,” he said.

Sparkasse Pforzheim Calw meanwhile issued its inaugural syndicated Eu250mn deal yesterday, with leads Erste, LBBW, Sparkasse Pforzheim Calw and WGZ pricing the five year issue at 1bp through mid-swaps and building order books of around Eu400m, after gathering IOIs on Wednesday.

Some 20 accounts were in the final order book, with banks taking 36.4% of the deal, central banks 36%, regional banks 26.3% and fund managers 1.3%. German accounts were allocated 97.6% and Austrian accounts 2.4%.

Dominik Hartmann-Springorum of Sparkasse Pforzheim Calw’s treasury said the deal went “great” and that the results met the issuer’s expectations.

He said Sparkasse Pforzheim Calw plans to issue one sub-benchmark bond each year and smaller issues more frequently.