Banca Popolare di Milano and CM-CIC tested the 10 year part of the curve today (Wednesday), with the Italian bank taking Eu900m of orders for a Eu750m OBG and the French issuer Eu1.1bn of orders for a Eu1bn deal, but bankers disagreed about the depth of demand at the longer end.

Banca Popolare di Milano

The two new issues come after most recent covered bond supply has been focused in the five to seven year part of the curve. Although Banco Populare di Milano’s (BPM) new issue is the third Italian 10 year benchmark to be launched this month, after Mediobanca sold a Eu500m deal on 3 November and Banca MPS a Eu1bn deal on Thursday of last week (19 November), the last 10 year before those deals came on 14 September, when Kuxtabank sold a Eu1bn issue.

BPM leads Banca Akros, Barclays, Crédit Agricole, Credit Suisse and HSBC launched BPM’s benchmark 10 year obbligazioni bancarie garantite (OBG) this morning with guidance of the 80bp over mid-swaps area. The deal was then re-offered at 78bp, for a deal size of Eu500m or Eu750m, with the book approaching Eu900m. The size was then set at Eu750m.

“This is a good result, having attracted sizable interest from investors and got some price tension, something not all recent trades have managed to do,” said a syndicate official at one of the leads. “A 10 year deal is still challenging for any issuer, but this went well.

“With CBPP3 still running, and rates and swaps relatively low, 10 year deals look attractive for issuers, as it’s a good time for them to lock in cheap funding at the longer end.”

A syndicate official away from the leads said that BPM might have found better demand if it had not followed Banca MPS, whose deal was priced at 127bp over mid-swaps.

“It is a difficult deal to follow,” he said. “Yes BPM is not the same sort of name, but deals in the 10 year maturity are real money-driven, so if some accounts have just bought 10 year Italian paper at a much wider spread – even if it is from a worse credit – they might sit this one out.”

Syndicate officials at and away from BPM’s leads said the deal’s new issue premium was difficult to calculate, given the Italian issuer has few outstandings, but they said it appeared to be smaller than most offered by recent peripheral deals. They estimated fair value was roughly 65bp based on the issuer’s curve, seeing its September 2022s at around 59bp, bid.

Syndicate officials also noted the Italian sovereign is trading at 60bp in the 10 year part of the curve.

The deal is BPM’s second benchmark covered bond of the year, following a Eu1bn seven year issue in September, which was its first since 2011.

Crédit Mutuel-CIC Home Loan SFH (CM-CIC) leads BNP Paribas, Credit Suisse, HSBC and JP Morgan launched the Eu1bn April 2026 issue with guidance of the 11bp over mid-swaps area, before fixing the spread at 10bp. The book closed in excess Eu1.1bn.

The deal is the first French 10 year issue since 2 September, when Caisse Française de Financement Local (Caffil) priced a Eu1bn deal at 3bp.

Some syndicate officials away from the leads said the deal offered a new issue premium of around 10bp based on the issuer’s secondary curve, with CM-CIC 2024s seen at around 1bp, bid.

However, others said these deals were not relevant, given substantial spread moves since CM-CIC last issued, and said the best comparable for the new issue is Caffil September 2025s, which they saw trading at 8bp, bid.

Syndicate officials away from the leads of both new issues said the size of the deals’ order books represented good results, but were divided over the main takeaways for deals at the longer end.

“These deal shows that deals in the 10 year bucket can work,” said one. “Investors are looking further out to get some pick up, so deals like these look interesting propositions.”

Another said that the deals had progressed relatively slowly, however.

“BPM looks OK, but it was by no means a blowout, and CM-CIC is only just oversubscribed,” he said. “It shows that 10 years are difficult.”

ABN Amro yesterday (Tuesday) tapped by Eu250m a Eu1.5bn September 2030 issue, following a reverse enquiry.

The original issue was priced on 22 September at 20bp over mid-swaps by leads ABN Amro, BNP Paribas, Credit Suisse, Deutsche and LBBW, and a syndicate official at one of the leads saw it trading at around 15bp, bid, before the tap was announced.

Syndicate officials said the broader market remains in good shape, with some surprised by the overall amount of primary market activity given the Thanksgiving period in the US and an Autumn Review and Spending Plan in the UK today, with one noting that other asset classes were outdoing covered bonds.

“Taking a helicopter view, if you look on screens and at how deals are performing, then senior and subordinated deals are doing way better than covereds at the moment,” said one. “Covered bonds had a good run in previous weeks, but when you see that books on senior issues are around twice that of covereds then it is a sign things are slowing down.

“Will covereds still be done? Absolutely, but not in the volumes we are used to from previous weeks, and there is not long left to go.”