SNS Bank today (Friday) confirmed plans to return to the covered bond market with its first benchmark since 2012, announcing a 15 year issue that is expected later this month, and bankers said the market’s reaction to fears of ECB tapering is helping rather than hindering such yield-driven trades.

SNS announced a mandate this morning for European investor meetings on Wednesday and Thursday of next week, ahead of a potential Eu500m no-grow 15 year covered bond. ABN Amro, Commerzbank, Credit Suisse and Société Générale are the leads.

The mandate comes after Cariparma on Wednesday sold the first benchmark 15 year covered bond since April, when ABN Amro sold a Eu2.25bn issue, and only the fifth of the year. As part of a dual tranche offering, Cariparma priced the Eu750m 15 year trade at 42bp over mid-swaps and a Eu750m eight year tranche at 21bp. The combined book closed at Eu2.6bn, with around Eu1.1bn of orders for the longer dated tranche. A syndicate banker at one of Cariparma’s leads noted that the 15 year tranche was trading 4bp tighter on the close, and the eight year 2bp tighter.

“From start to finish it was a good transaction,” he said. “A 15 year Italian issue doesn’t have the clearest runway, but it went very well and perhaps even paved the way for other issuers.”

A syndicate banker on SNS Bank’s mandate said the Dutch issuer had been eyeing a longer maturity for some time.

“Cariparma’s deal was not necessarily the initial starting point for us, but it is one of the bricks that builds the wall for these extra-long deals,” he said. “SNS’s trade is of course a long-planned strategic benchmark.”

Bankers said Cariparma’s long-dated issue in particular had been supported by a back-up in yields that began on Tuesday, after reports emerged suggesting that buying under the ECB’s asset purchase programme could be tapered.

“The wider market is trading weaker, but if anything, the impact of the tapering discussion is helping the primary market,” said the syndicate banker on Cariparma’s deal. “Since the news broke rates rose 3bp-5bp, in terms of euro swaps, which coupled with stable risk sentiment has meant yields on offer on new issues are more attractive.

“On the Cariparma 15 year in particular, which is more of a yield play, being above the 1% coupon mark helped us a lot, and this new rates move solidified that.”

The SNS lead syndicate banker agreed that the market is heading in a supportive direction for such deals.

“We have relatively reasonable coupon levels these days, after the market came back quite significantly over the last few sessions,” he said. “We hope this will continue and we will still have supportive market conditions either at the end of next week or the week after.

“It’s a very healthy trend, at least if you want to target yield-driven trades. It helps more than it hinders.”

SNS has not issued a benchmark covered bond since being nationalised in 2013, with its last deal having come in August 2012. The Dutch issuer, which is still state-owned, announced on Tuesday of last week (27 September) that it will as of 1 January change its name to de Volksbank.

Last week Bart Toering, head of funding at SNS Bank, told The Covered Bond Report that the issuer would return to the market ahead of the rebrand, using its established soft bullet programme.

Ibercaja will today conclude a series of investor meetings ahead of a potential euro benchmark cédulas hipotecarias with a seven year maturity. A syndicate banker at one of leads Crédit Agricole, Commerzbank, HSBC and Natixis said the deal will probably be launched early next week.

Bankers said other issuers are also monitoring the market and assessing whether to launch euro benchmark deals next week.

“Covereds are going very well, against the backdrop of limited supply,” said a banker. “Sentiment is up and down on a day to day basis, but we had a couple of sessions this week where it has been more up than down, and I expect that to continue.”