Crédit Agricole took around Eu1.75bn of orders for a Eu1.25bn short eight year covered bond today (Tuesday), with bankers saying markets look in good shape and could remain open tomorrow ahead of a Thursday ECB meeting. Meanwhile, Kookmin has mandated for a roadshow.

The new issue for Crédit Agricole Home Loan SFH was launched into a clear market after having been announced yesterday (Monday), when no new benchmark covered bonds were out.

Leads BBVA, Commerzbank, Crédit Agricole, LBBW, NordLB, RBC and UniCredit launched the euro benchmark September 2023 issue with initial price thoughts of the 10bp over mid-swaps area, before moving to guidance of the 8bp-10bp area (will price within range) having taken orders in excess of Eu1.25bn. The spread was then fixed at 8bp and the issue size at Eu1.25bn with the books over Eu1.6bn. The final order book was around Eu1.75bn.

“It went very well, with this result at the upper end of expectations,” said a syndicate official at one of the leads.

The lead syndicate official said the quality of the order book was a highlight of the deal, comprising sizable bids from asset managers and banks alongside central banks.

“It is evidence that with this type of maturity, core issuers can still capture the maximum investor audience, and Crédit Agricole were well rewarded for that,” he said.

The lead syndicate official said the deal offered a new issue premium of around 5bp-6bp, based on the issuer’s secondary curve. Syndicate officials at the leads said Crédit Agricole 2021 and 2022 paper was quoted at 3bp to 1.4bp through mid-swaps, bid, before the deal was announced yesterday.

A syndicate official away from the leads meanwhile put the new issue premium slightly higher.

“They paid up, but as we head into the year end and there’s less cash out there that is exactly what all issuers are going to have to do, and this looks a very good deal nonetheless.”

The lead syndicate official said the demand received by Crédit Agricole shows that a window remains for issuance tomorrow, ahead of an ECB meeting on Thursday at which the central bank is expected to announce an expansion of its asset purchase programme and a deposit rate cut (see separate article).

“Notwithstanding the importance of the ECB’s announcement, this shows that there is still strong support for assets of this type, and that investors are still happy to buy,” he said.

However, syndicate officials noted there was more activity in the senior market today, with a Santander Eu1.25bn seven year issue attracting demand of some Eu3bn after having offered a new issue premium of around 20bp at IPTs and 10bp at re-offer.

“Although Crédit Agricole pulled off a good trade, today shows for me that the senior market is where it’s at,” said one. “Covered bonds probably need a bit of a breather, while the senior market still looks very constructive.

“If I were a betting man, I would want to be investing in senior.”

Kookmin Bank has mandated BNP Paribas for a roadshow ahead of a potential US dollar-denominated Reg S/144A covered bond issue. Investor meetings will be held from 7 to 10 December, in Zurich, London and the US.

Kookmin sold the first covered bond to be launched under dedicated South Korean legislation, pricing a $500m (Eu473m, Won578.3bn) five year issue at 90bp over mid-swaps on 14 October.