Helaba sold a Eu2bn dual tranche, five and 10 year Pfandbrief offering and CFF attracted over Eu1.9bn of orders to a Eu1.5bn long six year today (Thursday) as issuers kept up the primary pace, and bankers remained upbeat on the strength of the market, even if demand dipped from peak levels yesterday.

“It’s the third day since the markets opened and primary is still going strong and keeping up the pace of three euro benchmarks per day,” said a syndicate banker. “At first glance, today’s supply was a little more muted than the blowouts that came before, with Helaba and Coventry rather slower.

“But there are specific reasons for that, with Helaba’s deal one of the tightest so far and with Coventry being the first UK benchmark for some time (see separate article), while CFF went as well as you’d have hoped. All in all it’s been another good day.”

Helaba announced a mandate yesterday afternoon for a dual tranche euro issue, comprising a five year mortgage Pfandbrief and a 10 year public sector Pfandbrief.

Leads Commerzbank, Crédit Agricole, DZ, Helaba, HSBC and UBS then launched the five year tranche with guidance of the mid-swaps minus 8bp area and the 10 year tranche with guidance of the minus 6bp area this morning. With the books having been open for an hour and 45 minutes, the leads announced that they had taken over Eu1.8bn of orders, with demand slightly skewed towards the five year tranche.

The spread of the five year tranche was then set at minus 9bp and the 10 year at minus 7bp, with combined books in excess of Eu2bn. The size of the five year tranche was later fixed at Eu1.25bn and the 10 year at Eu750m.

“I think Helaba were helped by the fact that euro swap rates picked up slightly this morning,” said a banker away from the deal. “But you would assume there was still some sensitivity around the yields, given that the spreads were tightened by just a basis point for each tranche.”

The five year was priced with a zero coupon and the 10 year at 0.625%, with respective yields of 0.023% and 0.641%.

The five year mortgage-backed tranche was seen as offering a new issue premium of around 3bp, with bankers citing Helaba July 2019s at minus 15bp, mid, and November 2020s at minus 16bp, as well as 2022 mortgage Pfandbriefe from a range of other German issuers, which were trading between minus 13bp and minus 11bp.

The 10 year public sector tranche offered a new issue premium of around 3bp, they said, with Helaba’s public sector May 2021s seen at minus 14bp, mid, November 2022s at minus 15bp, and June 2023s at minus 13bp.

Compagnie de Financement Foncier (CFF) leads ABN Amro, Banca IMI, LBBW, Natixis and Société Générale launched the long six year issue with guidance of the 8bp over mid-swaps area this morning, before revising guidance to the 6bp area on the back of books over Eu1.5bn. The deal was then re-offered at 5bp with books over Eu1.9bn, before the size was fixed at Eu1.5bn.

“We are very pleased with the response today, as the book built very quickly, passing Eu1bn after just 40 minutes,” said a syndicate banker at one of the leads. “It was helped by a good combination of factors – the issuer has a high number of redemptions in January, and the spread on offer is juicer than some of the alternatives out there today.

“With 90 accounts in the book there are more investors participating than in Caffil’s trade on Tuesday, and it’s a very decent number.”

Syndicate bankers said the deal offered a new issue premium of 3bp-5bp, citing CFF’s secondary curve.

“That’s fairly reasonable and is at least in line with what we have seen so far this week,” said a banker at one of the leads. “DNB’s deal yesterday is being held up as the most impressive so far, after being priced with at most 2bp of premium, but it is a different story with different supply dynamics.”

Bankers away from the leads said the higher premium was justifiable given that CFF had taken a large size out of the market.