LBBW and TD built well oversubscribed books for euro benchmarks yesterday (Tuesday), with the German issuer said to have enjoyed an increase in Pfandbrief participation, while an attractive spread was seen as having helped the Canadian. Meanwhile, Caffil said a dual-tranche debut represented a good start to 2016.

LBBW leads Crédit Agricole, ING, LBBW, Lloyds and UniCredit launched the mortgage-backed Pfandbrief with initial price thoughts of the 4bp through mid-swaps area. Guidance was then revised to the 6bp through area, plus or minus 1bp, on the back of books over Eu1.4bn, before the final spread was set at 7bp through and size at Eu750m.

“We are very pleased with this transaction as all the objectives of the issuer were met,” said a syndicate official at one of the leads. “The issuer had been willing to print Eu500m but had targeted a Eu750m issue size, so this was perfect for them.

“On top of that they managed to achieve a very ambitious pricing target at minus 7bp.”

The lead syndicate official noted that the last four year Pfandbrief was a Eu500m issue for UniCredit on 8 December that was priced at minus 5bp, and was seen trading at around re-offer.

“To print a deal with 50% more size 2bp tighter is an outcome we can all be happy with,” he said.

The deal was priced with a yield of 0.066%.

“There were a couple of syndicates away from the deal that I spoke to who were not sure about the four year maturity – whether that would mean the yield was just too low,” added the lead syndicate official. “But we had a good feeling, and the market backdrop was quite supportive for this kind of low risk asset.

“A shorter covered bond was something the market was looking for, given the muted start to the year.”

The final order book contained almost 60 accounts, with banks taking 46.5% of the deal, central banks 36.7%, fund managers 9.7%, official institutions 6%, insurance companies 0.5%, and others 0.6%. German accounts bought 75.9%, the Nordics 9.3%, Asia 6%, Switzerland and Austria 3.4%, Central and Eastern Europe 2.7%, the Benelux 1.8%, the UK 0.7%, southern Europe 0.1%, and others 0.1%.

“We had seen in 2015 continuously shrinking numbers of investors looking at Pfandbriefe, simply because of relative value and the absolute yield compared to other covered bonds,” added the lead syndicate official. “The almost 60 orders we received are significantly more than we saw for other Pfandbriefe at the back end of last year, when some deals went to only 20-30 investors.”

Toronto-Dominion Bank leads Barclays, Goldman Sachs, Société Générale and TD launched the Eu1bn (C$1.5bn) five year deal with IPTs of the mid-20s area over mid-swaps, before moving to guidance of the 22bp area and fixing the size at Eu1bn on the back of books over Eu1.25bn. The spread was then set at 20bp, before the books closed at Eu2bn.

“For me, this deal ticked all the boxes,” said a syndicate official at one of the leads. “It built a twice oversubscribed book thanks largely to an attractive pick-up, and with that spread and its repo eligibility this deal clearly made sense for a lot of investors.”

Banks and private banks were allocated 38% of the deal, central banks and official institutions 34%, fund managers 19%, pension funds and insurance companies 7%, and others 2%. Accounts from Germany and Austria bought 35%, Asia 16%, the Benelux 15%, the UK and Ireland 14%, the Nordics 11%, France 4%, and others 5%.

Caisse Française de Financement Local (Caffil) hit the market with its first dual-tranche covered bond issue yesterday, after having announced the mandate for the public sector obligations foncières on Monday.

“This dual issue is a great premiere for Caffil,” said Philippe Mills, chairman of the supervisory board of Caffil and chairman and CEO of parent SFIL. “It is also an unusual type of transaction on the covered bond market and it is usually dedicated to the best signatures.

“Its success illustrates the investors’ confidence in SFIL and Caffil, and is a good start for the 2016 issuance programme of Caffil.”

Leads BNP Paribas, Crédit Agricole, LBBW, Société Générale and UniCredit priced a Eu1bn April 2022 tranche at 7bp over mid-swaps area and a Eu500m 15 year tranche with guidance at 25bp area, both in the middle of guidance. The final combined book was in excess of Eu1.4bn, while the individual books were not disclosed.

Syndicate officials away from the leads said demand for Caffil’s deal appeared underwhelming next to the new issues from LBBW and TD, but said the issuer had done well to get its deal done in a challenging environment.

The order book for the Eu1bn April 2022 tranche contained some 50 accounts, with investors from France taking 42%, Germany and Austria 39%, and the UK 10%. Central banks and official institutions were allocated 45%, bank treasuries 40%, asset managers 10%, and insurance companies 5%.

The order book for the Eu500m 15 year tranche was made up of almost 30 investors, with accounts from Germany and Austria taking 47%, and France 45%. Insurance companies bought 44%, central banks 40%, banks 10%, and asset managers 6%.

Mills said Caffil will be a regular issuer on the European covered bond market in 2016, with a target of issuing around Eu7bn in 2016. The French issuer sold Eu5.5bn in euro benchmarks last year.