A Eu1.5bn five year covered bond for Lloyds that attracted over Eu2bn of demand today (Monday) showed investors still preferring non-CBPP3 names, according to bankers, while a Eu750m seven year for SG was deemed less impressive but respectable, and Erste and pbb sevens are mandated.

Syndicate officials noted that of eight euro benchmark covered bonds last week, the best received were those ineligible for the ECB’s third covered bond purchase programme, while demand was more limited for seven year issuance, with bankers describing a three year from Bank of Montreal and five year benchmarks from Toronto-Dominion and DNB Boligkreditt as the highlights of the week’s supply.

Lloyds leads Crédit Agricole, Lloyds, Société Générale, UBS and UniCredit launched the UK bank’s five year euro-denominated deal with initial price thoughts of the 20bp over mid-swaps area, before moving to guidance of the 18bp area. The deal was then re-offered at 17bp over mid-swaps and the issue size set at Eu1.5bn (£1.13bn) with books over Eu2bn. The book closed at Eu2.2bn.

“This deal has worked very well, tightening in from the IPTs and finding impressive interest,” said a syndicate official away from the leads.

Some syndicate officials away from the deal said it offered a new issue premium of 8bp-9bp, seeing Lloyds September 2020s at 7.5bp, mid, and April 2021s at 8.5bp. They said this was a larger concession than had been paid by most deals since the market reopened last week.

However, other syndicate officials, including a syndicate official at one of the leads, said the new issue premium was closer to 4bp-5bp, and said this was in line with last week’s supply.

Lloyds’ deal represented a quick return to the covered bond market for the UK bank after it priced a £750m three year FRN last Tuesday.

Société Générale SFH leads Danske, ING, LBBW, Santander, Société Générale and UniCredit launched the seven year obligations de financement de l’habitat (OH) with guidance of the 8bp over mid-swaps area, before announcing after almost three hours that the books were approaching Eu850m with the guidance unchanged, for an expected minimum deal size of Eu750m.

The leads then fixed the spread at 7bp having taken Eu1.1bn of orders, setting the size of the deal at Eu750m.

Syndicate officials away from the leads noted that the deal seemed to have progressed slowly and found more modest demand than Lloyds’ issue, but said the landing point represented a decent result.

“The books are OK and they have tightened the spread, albeit only slightly, so I would say this is a respectable deal for SG, if not exactly a great one,” said one.

The deal offered a new issue premium of 6bp-7bp according to syndicate officials, citing SG September 2022s at 2bp, bid.

Syndicate officials said the outcomes of the two deals show that investors continue to prefer paper from non-Eurozone issuers and deals in the three to five year part of the curve.

“It still looks like demand for seven years is rather muted, and the pattern we saw last week, with non-Eurozone names gaining more momentum and building the better books, is continuing,” said one. “I do expect we’ll see more seven year projects, but the medium maturities look best.”

SG’s deal is the third benchmark covered bond from a French issuer since the market reopened last week, following a dual tranche Eu1bn long six year and Eu500m 15 year from Caffil on Tuesday and a Eu500m seven year for La Banque Postale on Thursday.

Erste is expected to hit the market with a seven year euro benchmark mortgage Pfandbrief tomorrow (Tuesday), after having announced a mandate this morning. Danske, Erste, Helaba, LBBW and Société Générale are the leads.

And Deutsche Pfandbriefbank has mandated BayernLB, Commerzbank, Crédit Agricole, Deutsche and DZ for a seven year mortgage Pfandbrief expected tomorrow.

Syndicate officials said they expect heavy euro supply this week, noting it is the first full trading week of the year after issuance was interrupted last week by public holidays on Wednesday.

“If we have stability and if trades continue to work like these offerings from SG and Lloyds, I think we will have a very busy week,” said one.