Stadshypotek took Eu1.7bn of orders for a Eu1.25bn long five year covered bond today (Tuesday) that was seen as offering one of the smaller new issue premiums of recent weeks, as the week’s supply left bankers in a positive mood ahead of anticipated further issuance.

Deutsche Bank SAE sold a Eu1bn five year cédulas hipotecarias debut this morning as well (see separate article) and syndicate officials said the reception enjoyed by today’s two benchmarks showed the covered bond market to be in good health, continuing the success of a Eu1.25bn five year OP Mortgage Bank issue that attracted some Eu1.75bn of demand yesterday (Monday) and which was described as one of the strongest post-summer deals.

“It has been a good day for the covered bond market,” said a syndicate official.

Stadshypotek leads BNP Paribas, Crédit Agricole, Danske, HSBC, Svenska Handelsbanken and UBS launched the Svenska Handelsbanken subsidiary’s Eu1.25bn February 2021 issue without IPTs, opening the books with guidance of the 15bp over mid-swaps area. The spread was then set at 12bp, on the back of over Eu1.5bn of orders, before the book closed at Eu1.7bn.

A syndicate official at one of the leads said the outcome was comparable to OP’s yesterday, while being achieved without the support of the ECB’s covered bond purchase programme, unlike the Finnish issue.

“This is a pleasing result,” he said. “In many recent trades issuers have had to pay up to take a large size out of the market, whereas this deal succeeded on both counts, getting the size with a smaller premium, while also attracting a diverse order book.

“It is almost like the good old days.”

The lead syndicate official said the deal offered a new issue premium of 4bp-5bp, seeing Stadshypotek October 2020s at 5.5bp, mid, and November 2021s at 8.5bp.

Some other syndicate officials away from the deal agreed, but another estimated fair value for the new issue to be 9bp based on bid levels, seeing the October 2020s quoted at 8.5bp.

“That is one of the tightest new issue premiums we’ve seen in a while,” he added. “Stadshypotek is one of the top names, and they don’t come to the market often, so they are always able to squeeze in the pricing.”

The new issue is Stadshypotek’s first benchmark euro covered bond since November 2014, when it sold a Eu1.25bn six year deal.

A euro-denominated issue from Caisse Centrale Desjardins de Québec is expected later this week, and syndicate officials said other issuers from a variety of European jurisdictions, including core and peripheral countries, are also actively monitoring the market.

“Overall I’m encouraged by the market today,” said one. “These deals show that the bid remains deep, even going into December.”

Another syndicate official agreed that the market felt supportive.

“There are a few things at work,” he said, “and we will certainly see more supply.”