PKO Bank Hipoteczny is set to sell its second euro benchmark covered bond tomorrow (Thursday), having today mandated for a Eu500m short six year that has been awaited since the Polish issuer announced a roadshow earlier this month, despite a softer tone in the wider markets this morning.

PKO Bank Hipoteczny, the specialist mortgage bank subsidiary of PKO Bank Polski, sold the first and to date only euro benchmark covered bond from Poland last October, another Eu500m short six year issue.

The issuer on 7 March flagged it was preparing to return to the market, mandating LBBW, PKO Bank Polski, Santander, SG and UniCredit for a European roadshow that it completed last Friday, having met over 50 investors.

It then announced a mandate this (Wednesday) morning for a Eu500m no-grow January 2023 issue. The lead group for the deal is the same as that which arranged the roadshow. A syndicate banker at one of the leads said the deal is likely to be launched tomorrow.

Syndicate bankers at the leads saw PKO’s June 2022s at around 22bp, mid, this morning. They noted that Poland October 2021s were at 5bp and September 2025s at 36bp.

PKO’s covered bonds are rated Aa3 by Moody’s, which is two notches above the sovereign, as they are capped at the country ceiling level. The Polish issuer’s debut was deemed to have been priced with only a slim 3bp pick-up versus the sovereign.

“It’ll be interesting to see where they come this time around,” said a syndicate banker away from the deal. “Given the ratings and the strength of the Polish product, they will have their eye on pricing through the sovereign sooner or later.”

No benchmark covered bond issues emerged today, and bankers noted a weaker tone in the wider market this morning, with a fall in US equities carrying over into European markets. The covered bond market was unaffected, however, and bankers said that any supply is likely to be well-received tomorrow, after yesterday’s deals – a Eu1.25bn five year for National Australia Bank and a Eu750m 10 year for Swedish Covered Bond Corporation – were seen as much as 3bp tighter this morning.