Deals for Sp Mortgage Bank and Caffil this week showed that new issuance remains viable even as volatility persists and winter torpor sets in, with a back-up in yields enabling both shorter dated and higher coupon trades, and representatives of the issuers cited positives amid challenging execution.

Since the post-Trump volatility lifted yields on covered bonds at the shorter end into positive territory for the first time in many months for some jurisdictions, issuers have favoured deals in the six to eight year part of the curve. Sp Mortgage Bank’s Eu500m debut, sold on Tuesday, was the first five year euro benchmark since June.

Kirsi Autiosalo, head of group funding at the Finnish Savings Bank Group, said Sp Mortgage Bank decided to enter the market in spite of the challenging conditions because the recent back-up in yields had presented a rare opportunity to print a deal in the short end.

“Our preferred maturity was five years and the higher swap yields made it easier for an inaugural issuer to price the deal as the possibility of a negative coupon was not there,” she said. “We could not know whether that would be the case in, say, early 2017.

“So we decided to go ahead given this window.”

Leads BNP Paribas, LBBW and Nordea launched the Eu500m no-grow five year issue with guidance of the 5bp over mid-swaps area on Tuesday morning, before the spread was fixed at 2bp with books above Eu800m.

“We are very happy with the deal,” said Autiosalo. “Most of the investors we met on the roadshow participated and we reached the granularity we were after.”

The final order book was just short of Eu900m with 48 accounts. Banks were allocated 40% of the deal, central banks and official institutions 35%, fund managers 15%, and insurance companies 10%. Accounts in the Nordics took 50%, Germany and Austria 33%, the Benelux 6%, Italy 4%, the UK and Ireland 2%, Switzerland 2%, France 1%, and others 2%.

Bankers said the new issue offered a substantial pick-up versus the level at which a new five year issue for a more established Finnish name would probably have been priced, estimating that a five year for Nordea or OP would have landed at around minus 7bp.

Autiosalo said it is natural that the deal offered such a pick-up, given its inaugural nature, and said the issuer expects its spreads to converge to around the level of the other Finnish issuers going forward.

“Supposing we continue issuing in benchmark size, we have estimated that the next issue will take place within the next 12-18 months,” she added.

On Wednesday, Caisse Française de Financement Local (Caffil) took a chance offered by a period of stability in the French sovereign curve to print an Eu500m 15 year covered bond, bucking the trend towards shorter dated issuance.

Leads Deutsche, HSBC, ING, LBBW and Natixis priced the Eu500m deal at 17bp over mid-swaps, down from initial guidance of 18bp, with the book closing at around Eu600m.

Amid the higher yield environment, the deal was priced with a coupon of 1.125%, the highest on a euro benchmark covered bond from a core issuer since March, when Credit Agricole Home Loan SFH priced a Eu1.5bn 15 year with a 1.25% coupon.

More than 20 accounts were in the final order book, with central banks taking 45%, insurance companies 40%, asset managers 9%, and banks 6%. Accounts in Germany and Austria bought 43%, France 40%, the Benelux 12%, the UK 2%, Switzerland 2%, and Asia 1%.

“With the issue executed today, Caffil confirms once again its unique positioning as a regular issuer for maturities longer than market average,” said Philippe Mills, chairman and CEO of SFIL and chairman of the supervisory board of Caffil.

He noted that Caffil has raised close to Eu6bn of wholesale funding this year with an average maturity of over 10 years, which he said aligns with SFIL group’s responsibilities in supporting the French local public sector and export finance.

SFIL, Caffil’s parent, sold a Eu1bn eight year debut senior unsecured issue on 11 October. SFIL plans to sell one or two benchmarks per year from the newly established Eu5bn EMTN programme, but has said that Caffil’s covered bond issuance will not be affected.

“After the successful first bond issue launched by SFIL last month, Wednesday’s issue demonstrates the efficiency of the French organization for refinancing the public sector based on SFIL/Caffil,” added Mills.

Caffil said the deal will be its last public benchmark of the year.

Next week could be the final week of the year for euro-denominated issuance, bankers said, noting that some investors already seem to be entering an end-of-year mode and citing the disruptive potential of an Italian constitutional referendum on Sunday of next week (4 December) and key central bank meetings in the following days.

Coventry Building Society began a roadshow today (Friday) ahead of a potential Eu500m no-grow seven year covered bond issue. The roadshow will conclude on Wednesday, and a syndicate banker at one of leads Commerzbank, Danske, HSBC and Natixis said the deal could be launched on Thursday or Friday of next week, subject to market conditions.

“Coventry are the only ones to have staked a claim on next week, and I think it will be quiet,” said the syndicate banker. “I would not be surprised to see another week like this one.”