BPCE got its price right to attract Eu2.4bn of orders for a “very healthy” Eu1bn seven year covered bond today (Tuesday), according to bankers, who said investor participation in new issues is increasing. Australia’s Macquarie Bank is meanwhile preparing the ground for a covered bond debut.

BPCE’s new issue was announced this morning after a start to the week that bankers described as encouraging, with CaixaBank yesterday (Monday) taking over Eu2.3bn of orders for a Eu1.5bn seven year cédulas and Abbey building a Eu1.3bn book for a Eu1bn long five year amid stable market conditions.

BPCE SFH leads BBVA, Deutsche, LBBW, Natixis and Société Générale launched the French seven year issue with initial price thoughts of the 20bp over mid-swaps area this morning, before moving to guidance of 18bp plus or minus 1bp on the back of over Eu1.8bn of orders. The size was then set at Eu1bn and the spread at 17bp, with the book closing at Eu2.4bn.

“The price parameters, the premium and the maturity are all good,” said a syndicate official away from the leads. “This looks like a very healthy trade.”

Some syndicate officials away from the deal said the new issue premium was larger than those offered by most recent core deals, but said this was appropriate given recent volatility in markets.

“This seemed somewhat generously priced, at the starting point at least,” said one. “But they are probably trying to play it super-safe and ensure a swift process, and why not? The last couple of French trades did not find the going so easy, so this seems like the right way to go.”

Some syndicate officials said the deal offered a new issue premium of 7bp-10bp, based on BPCE’s secondary curve. The deal was seen as offering a pick-up of around 35bp to OATs.

Syndicate officials added that oversubscription levels seem to have increased for recent trades after demand was more limited at the end of January, citing the demand for CaixaBank’s new issue in particular.

“I think it is fair to say that investors are returning to the market, to an extent,” said one. “Caixa was generous in terms of the pricing – though not inappropriately so – and of course that helped, but we have seen other trades also look good and get sizeable orders.

“I think that is an outcome of the spread widening we have seen, particularly in core deals, and the new relative value is pushing investors that had been waiting on the sidelines to get involved in core deals once again.”

Syndicate officials said they expected a steady stream of euro supply this week, with some suggesting that issuers might continue to launch one deal per day. They noted that issuance will likely be interrupted next week when some German areas celebrate the traditional Carnival holiday.

“Conditions are stable, it is just a question of premium,” added one. “Like CaixaBank yesterday, BPCE showed you can get big deals done and attract really strong order books, but you have to pay up.

“If you don’t, I suspect the market might feel a little heavy.”

Macquarie Bank yesterday announced a mandate for a series of investor meetings in Europe, from next Monday (8 February) to Friday ahead of a potential euro-denominated covered bond issue that would be its first in the asset class.

As previously reported in The CBR, the Australian issuer established its A$5bn (Eu3.26bn, US$3.54bn) covered bond programme last year.

Barclays, HSBC and SG have the roadshow mandate. Issuance is expected to be rated Aaa/AAA by Moody’s and Fitch.