ABN Amro and DNB sold the joint largest euro covered bonds since April today (Wednesday), the Dutch bank a Eu2bn 15 year, with a Eu250m 20 year tranche added, and DNB a Eu2bn five year that drew over Eu3.25bn of orders almost flat to secondaries. Coventry and Helaba are due tomorrow.

Today’s deals continued the trend set yesterday (Tuesday) by market openers LBBW, CaixaBank and Caffil on the first day of 2017 supply, with the three issuers printing in size to take an aggregate Eu4bn out of the market as order books evinced the depth of investor appetite.

“Given the high levels of demand and quite appealing levels available in the market, and the general consensus that world events and risks will make finding windows quite tricky later in the year, issuers are very open to taking size and getting a good chunk of their funding plans done while the sun is shining,” said a banker.

Coventry Building Society, which roadshowed at the end of November but held off issuing last year, is now expected tomorrow having today announced a mandate for a Eu500m seven year no-grow deal via Commerzbank, Danske, HSBC and Natixis. The deal will be the first UK euro benchmark since the Brexit vote in June and the issuer’s first since October 2014, with its benchmark covered bond having been a £500m three year FRN in March 2015.

Helaba announced a mandate this afternoon for a dual tranche euro issue, comprising a five year mortgage Pfandbrief and a 10 year public sector Pfandbrief. The deal is expected tomorrow, according to a banker at one of leads Commerzbank, Crédit Agricole, DZ, Helaba, HSBC and UBS.

ABN Amro announced the mandate for its 15 year euro benchmark covered bond yesterday, with leads ABN Amro, BayernLB, BNP Paribas, Commerzbank and UBS. The deal was launched this morning with guidance of the 18bp over mid-swaps area, before the spread was fixed at 15bp on the back of Eu2.4bn of orders, with the size eventually set at Eu2bn.

The leads then announced an additional 20 year tranche with a minimum size of Eu250m, which was priced at 20bp over mid-swaps. Bankers at the leads said the 20 year tranche was launched in response to reverse enquiries received during the execution process.

“Considering the accumulative size that ABN has taken out at the long end, it’s a very impressive trade,” said a banker away from the deal.

The new issue is ABN Amro’s third benchmark 15 year covered bond since 2015, with the last a Eu2.25bn April 2031 issue sold in April of last year.

Seeing the April 2031s trading at 5bp-6bp, bid, bankers away from the leads said the 15 year tranche offered a new issue premium of around 7bp-8bp. Some suggested this was more generous than necessary, given the high levels of demand in evidence.

“It is a different type of trade, and you can understand being more cautious for a longer maturity,” said one, “but this premium does look quite generous when you have their counterparts in Oslo paying no premium at all.”

In January 2015 Caisse Française de Financement Local (Caffil) sold a Eu500m January 2035 issue, while Deutsche Pfandbriefbank and Caffil sold 19 year issues last year.

“You don’t get many players in that part of the curve, with only Caffil really having much of a presence there, so it is interesting to see investors specifically ask for a 20 year,” said a syndicate banker away from the leads. “It shows potential at the long end.”

Bankers suggested that Dutch issuers might aim to frontload funding ahead of the country’s general election on 15 March, with market participants wary of the potential market impact of a victory for EU sceptic, far right candidate Geert Wilders.

“We have seen in the cases of the Brexit vote and the Italian referendum, although there are deeper issues in Italy, that such headlines can make things difficult for issuers,” said a syndicate banker.

DNB Boligkreditt leads HSBC, LBBW, NordLB and Société Générale launched the Norwegian bank’s five year issue with guidance of the 5bp over mid-swaps area, before revising guidance to the 2bp area having taken around Eu2.5bn of orders. The spread was then fixed at flat to mid-swaps and the size at Eu2bn, with the book closing at over Eu3.25bn.

“DNB’s trade is the highlight of today,” said a syndicate banker away from the leads. “The size is particularly impressive.

“There were question marks around trades that were sized at Eu1bn at the end of last year, now Eu2bn-sized trades are flying. It just shows the depth of investor appetite at the moment.”

Today’s two new issues are the joint-largest single tranche euro covered bonds since ABN Amro’s Eu2.25bn issue last April, and DNB’s is the largest from a Nordic issuer since DNB sold a Eu2bn issue in March 2012.

Syndicate bankers said the deal was priced with little to no new issue premium, seeing DNB Boligkreditt’s March 2022s trading at flat, bid, and January 2021s at around minus 1bp.

“They offered a nice, appropriate 5bp premium to start, but clearly the momentum was so strong as to justify the move,” said a banker away from the deal.

Bankers said that DBN Boligkreditt in particular had benefitted from such strong demand – substantially more than that received by yesterday’s deals – largely because of the strength of the issuer and jurisdiction.

“People like the DNB name, they like this maturity, and they like the slightly higher yields that are currently on offer,” said one. “In this seller’s market, I think it is as simple as that.”

After announcing a reopening of Commerzbank’s Eu500m February 2023 issue for an expected Eu500m tap yesterday afternoon, leads Commerzbank, Danske, Deutsche, ING, Natixis launched the deal with guidance of the mid-swaps minus 7bp area this morning.

The leads announced after one hour that the book had surpassed Eu500m, before revising guidance to minus 8bp plus or minus 1bp will price within range and fixing the size at Eu500m, on the back of orders “well in excess of” Eu600m. The deal was then re-offered at minus 9bp.

The original issue was priced at 12bp through mid-swaps on 16 November, and seen trading at around minus 10bp-9bp today. Syndicate bankers added that it was appropriate that the deal was priced 1bp wider than LBBW’s Eu1bn seven year issue yesterday.

“Investors seem to prefer LBBW at the moment,” said one.