Pfandbriefe of Eu750m apiece from Erste and pbb today (Wednesday) showed investors are becoming more receptive to seven year paper, according to bankers, while BNS replicated the success of peer BMO. BayernLB and RLB Steiermark are expected with euro benchmarks tomorrow and Kookmin with a dollar issue.

With Bankia also pricing a Eu1bn five year (see separate article), four issuers were in the market today selling Eu4bn of euro benchmark covered bond supply, taking issuance this week to Eu6.25bn including Eu1.5bn Lloyds and Eu750m SG SFH issues yesterday (Monday). A mandate for Deutsche Bank SAE alongside the abovementioned means the market is set for a further four benchmarks – including one dollar – tomorrow.

Syndicate officials said today’s two seven year Pfandbriefe, Erste’s in particular, suggested that the bid for seven year paper was becoming stronger after shorter-dated deals had attracted higher demand since the market reopened last week.

“I think these show that anything in the range of three to seven years is now doable,” said one. “We still some accounts pushing back on the seven year maturities, but not a significant amount.

“It’s also encouraging that, as Eurozone names, these went well, as the non-CBPP3 guys have so far looked stronger.”

Erste Group Bank leads Danske, Erste, Helaba, LBBW and Société Générale launched the seven year mortgage Pfandbrief with guidance of the 20bp over mid-swaps area. The guidance was then revised to the 18bp area and the size fixed at Eu750m on the back of books over Eu1bn.

The leads then issued final guidance of the 17bp area, plus or minus 1bp, with the books approaching Eu1.4bn, before fixing the spread at 16bp. More than 80 accounts were in the final book, according to a syndicate official at one of the leads.

“For all the weakness we have seen in the Austrian market, this is quite some success,” said the lead syndicate official. “To build such an oversubscribed and granular book is a great result.

“I can’t remember the last time more than 80 accounts participated in such a trade.”

Syndicate officials said fair value for the new issue was around 8bp, seeing Erste February 2022s at 7bp, mid, and February 2024s at 10bp.

“That 8bp new issue premium is in line with what we have seen in the market so far, and what Lloyds paid yesterday, for example,” said the lead syndicate official.

Deutsche Pfandbriefbank (pbb) leads BayernLB, Commerzbank, Crédit Agricole, Deutsche and DZ launched the German bank’s seven year mortgage Pfandbrief with guidance of the 8bp over mid-swaps area. After almost two hours the leads announced that books were approaching Eu700m, with the guidance unchanged, before fixing the spread at 8bp with books around Eu700m. The size of the deal was then set at Eu750m, with the book closing at around Eu850m.

A syndicate official said pbb November 2020s, quoted at 2bp, bid, are the most appropriate comparable for the new issue, because many of the issuer’s older outstandings are squeezed. He said these implied fair value for the new issue of 3bp-4bp.

Bank of Nova Scotia leads BNP Paribas, Deutsche Bank, HSBC, Scotiabank and UBS launched the three year Canadian issue with initial price thoughts of the 15bp over mid-swaps area. The leads announced after around one hour and 15 minutes that the books were well in excess of Eu1bn, with the guidance unchanged, before fixing the spread at 12bp on the back of books in excess of Eu1.8bn. The book then closed at around Eu2bn and the size of the deal was set at Eu1.5bn.

The deal followed a Eu1.5bn three year issue for Bank of Montreal that was priced at 12bp from guidance of the 15bp area on Thursday of last week (7 January), and attracted orders in excess of Eu2.25bn.

“This new trade for BNS more or less mirrored BMO, which is a decent result given that wider market conditions have not exactly improved market in the meantime,” said a syndicate official away from the leads. “For me there is no material difference in the credits, so that is appropriate.”

A syndicate official at one of the leads noted that the book for BMO’s issue was slightly larger, but that BNS had otherwise matched its peer’s result.

“We are very happy with that,” he said. “With Eu2bn books, price revision of 3bp and a minimal new issue premium, this is a very solid result.”

The lead syndicate officials said fair value for the deal was around 12bp, seeing BNS April 2019s at 12.5bp, mid.

Bank of Nova Scotia also priced a £400m three year FRN last Thursday.

Bayerische Landesbank is expected tomorrow with a Eu500m no-grow 10 year public sector Pfandbrief, after having this afternoon announced a mandate. BayernLB, Crédit Agricole, DZ and NordLB are the leads.

Raiffeisen-Landesbank Steiermark is also expected tomorrow after announcing a mandate for a Eu500m no-grow seven year mortgage-backed covered bond, with BayernLB, Commerzbank, Crédit Agricole, Erste and RBI as bookrunners, and Raiffeisen-Landesbank Steiermark AG as co-lead.

Kookmin Bank is expected to launch the first dollar benchmark of the year tomorrow, having announced a mandate for a $500m issue with leads ANZ, BNP Paribas, Commerzbank and DBS. Kookmin in October sold the first covered bond to be launched under dedicated South Korean legislation, a $500m five year issue.