Sparkasse Pforzheim Calw priced a Eu250m five year Pfandbrief today (Wednesday) as supply in the euro market slowed after a busy start to the week, while bankers said issuers in the pipeline may be hesitant to launch awaited deals in spite of decent oversubscription levels in recent trades.

Sparkasse Pforzheim Calw’s sub-benchmark issue was the only euro deal to be priced today after five deals on Monday and Tuesday took euro benchmark supply for the week to Eu4.75bn.

Leads Erste, LBBW, Sparkasse Pforzheim Calw and WGZ began gathering IOIs for the Eu250m no-grow five year mortgage Pfandbrief yesterday (Tuesday) afternoon, having set initial price thoughts at the flat to mid-swaps area.

The leads issued guidance of the minus 1bp area at around 09:45 CET this morning after having gathered orders approaching Eu400m, before the re-offer was fixed at minus 1bp.

“Those books are very good for a Eu250m deal,” said a syndicate official at one of the leads. “Usually printing a deal of such a small size carves out many of the prominent buyers of covered bonds, who can only look at benchmarks, so still seeing this amount of interest is a decent result.”

Syndicate officials said the spread looked attractive versus German paper, with the most recent five year German Pfandbrief, a Eu500m deal from UniCredit on 24 September, priced at 9bp through mid-swaps.

The lead syndicate official saw the deal as offering a 35bp pick-up over Bunds.

He said the deal had been printed with only a marginal new issue premium. He said that as the issuer had no secondary curve, the leads and issuer had noted when pricing the deal that comparable trades from Sparkasse KölnBonn and Kreissparkasse Köln were also quoted at around flat to mid-swaps.

The deal is Sparkasse Pforzheim Calw’s largest covered bond issue to date.

Syndicate officials said primary market supply could remain relatively limited tomorrow (Thursday) in spite of a well-stocked pipeline.

“Certainly issuers are watching and waiting, but those looking at yesterday’s deals will see that the picture is not clear,” said a syndicate official. “What we saw is that the tier one names did well and attracted good demand, but for the tier two names it is hard to tell how good this market is.”

The syndicate official said oversubscription levels for a Eu1.25bn DNB Boligkreditt seven year issue and a Eu1bn long seven year from Caffil were impressive, while demand for a Eu500m 5.5 year from RLB NOe-Wien looked more modest.

“If you look at the pipeline it is mostly tier two names in there,” he said, “so those issuers would probably do better to wait on the sidelines.”

Euro deals are expected from Banca Carige, Eika Boligkreditt, Hypo Tirol and Raiffeisenbank a.s., all of which recently finished promoting potential deals.

“It’s just a matter of stepping into the market at the right time,” said a syndicate official at one of Hypo Tirol’s leads. “We’ve seen that Austrian deals have gone well, but we want to be especially prudent and make sure the relevant lines are in place.”

Another syndicate official said however that more euro deals could emerge this week if issuers are willing to pay the necessary premiums.

“I can’t see why deals can’t be done if people can get their heads round the numbers,” he said. “This week’s deals show the funding option is open, and even if spreads aren’t at the most appealing levels for issuers they are still fairly tight on a historical basis.”

Caffil meanwhile said that it was able to execute its deal quickly and to achieve solid and diverse demand in spite of the inauspicious market conditions.

“This transaction was executed smoothly and brings together a wide range of Caffil’s traditional investors, in addition to the support provided by the Eurosystem,” said Philippe Mills, chairman and CEO of SFIL and chairman of the supervisory board of Caffil.

He said that after the new issue Caffil has raised Eu5.8bn in funding this year.