Belfius sold a three times oversubscribed Eu500m six year Pandbrieven today (Wednesday) with a premium of 1bp, benefitting from a lack of Belgian supply and a pick-up over core Eurozone supply, according to bankers, while SpareBank 1 sold a “textbook” Eu1bn seven year.

Belfius’s and SpareBank 1’s deals today continued the recent brisk supply of euro benchmark covered bonds, with United Overseas Bank (UOB) also selling a Eu500m five year debut (see separate article), as issuers favour the asset class this week amid supportive market conditions.

European equities opened up this morning, following strong US data and a positive session in Asia, and syndicate officials noted that the market remained strong and that credit indices held up in spite of a slight reversal through the day.

“Clearly, things are still looking bright in covered bond land,” said one.

Belfius Bank’s new issue follows a Eu1.25bn long six year for Belgian peer KBC on Tuesday of last week that was priced at 19bp over mid-swaps and drew some Eu3.5bn of demand – the most demand for any covered bond so far this year.

Leads Belfius, Credit Suisse, LBBW, Natixis and Société Générale launched the new Eu500m no-grow six year mortgage Pandbrieven with guidance of the 20bp area. The deal was then re-offered at 17bp on the back of around Eu1.4bn of orders, with the book closing at over Eu1.5bn.

Syndicate officials at and away from the leads said the deal offered a new issue premium of 1bp based on the mid side of Belfius’ secondary curve.

“It’s a great outcome, and one of the tightest prints we have ever seen for a Belgian name,” said a syndicate official at one of the leads. “Thanks to the very strong demand it was comfortable to print at this level and clearly the deal benefitted from the undersupply of Belgian Pandbrieven.

“Witnessing the strong demand for this product, following KBC, the issuer saw that you could go tighter with a limited size, and in the end we probably could have priced at 16bp, but decided to keep some slight premium on the table.”

Syndicate officials away from the leads said that deal had also likely found strong demand, in spite of the slim premium, because of its attractive spread versus supply from other core and semi-core European jurisdictions and a pick-up of around 40bp over the sovereign.

Syndicate officials noted that KBC’s issue was seen at 17bp, mid, this morning.

“The price on this seemed relatively aggressive, with it coming inside of KBC’s landing point, but that is a function of this deal’s smaller size and slightly shorter maturity,” added a syndicate official away from the leads. “With a Eu500m no-grow you can do that.

“The books don’t look so impressive next to the KBC, but not many books do. Belfius have been bit more pushy with the price and got almost a three times oversubscribed deal at a good level for them.”

The lead syndicate official noted, however, that the oversubscription level of Belfius’ issue is higher than that of KBC.

“The issuer can be very happy with that demand,” he said.

SpareBank 1 Boligkreditt leads Commerzbank, Crédit Agricole, LBBW and Natixis launched the seven year issue with guidance of the 25bp over mid-swaps area. The spread was then set at 23bp, on the back of over Eu1.25bn of orders, before the size was set at Eu1bn (Nkr9.43bn).

“This was a rather textbook trade,” said a syndicate official at one of the leads. “The books are not as large as the Belgian’s, but this is a non-Eurozone product for an issuer that has been more frequent recently and was focussed on the price, so it is a good outcome.”

Syndicate officials at and away from the leads said the deal offered a new issue premium of around 5bp, seeing SpareBank 1 February 2021s at 11bp, mid, and September 2022s at 17bp.

“That premium to mid levels is in line with recent supply,” said the lead syndicate official.

A syndicate official away from the leads said demand for the deal may have been slightly limited by the frequency with which SpareBank 1 has returned to the market in recent months. The Norwegian bank sold a Eu1bn September 2022 issue in August and a Eu1.5bn 2018 issue in November, after having been absent from the euro benchmark market November 2013.

“They have taken a fair bit out of the market recently,” he said. “But they still took the Eu1bn size, which they like, so it seems a solid result.”

With UOB also attracting Eu1.3bn of orders for its Eu500m debut today, bankers said a series of comfortably oversubscribed deals will encourage more covered bond issuers to tap the market this week. They noted that only Swedbank was active in the senior market today, selling a three year euro FRN.

“Looking across the screens, the takeaways from today’s supply is the same as the days before,” he said. “Covereds are going well, and in senior, even though the market looks OK, there just isn’t much going on.

“I’d be surprised if the deals aren’t still flowing tomorrow.”