Société Générale issued a Eu750m eight year covered bond today (Tuesday) that, despite soft market conditions and a dying down of post-election enthusiasm for French paper, attracted some Eu1.6bn of demand and was priced with a marginal pick-up versus secondaries.

Following the first round of the French presidential election on 23 April, OAT spreads rallied, improving the relative value of French covered bonds and contributing to a wave of successful supply, the last a Eu1.5bn five year for Compagnie de Financement Foncier on 9 May.

Société Générale SFH leads Banca IMI, LBBW, Mediobanca, Natixis, Santander and SG launched today’s Eu750m no-grow eight year deal with guidance of the mid-swaps minus 2bp area at 8:45 CET this morning. After one hour, the leads announced the books had topped Eu1bn.

“Books grew at a slower pace than the recent trades from Caffil and CFF, which benefitted to a higher extent from the Macron victory and French spread compression trade, because they came to the market soon after the vote,” said a syndicate banker at one of the leads. “I think that is just a sign that the French market is getting back to normal.

“In addition, it was a bit of a softer opening this morning in comparison to yesterday. But nevertheless, demand was clearly in favour of the issuer.”

At 10:30, guidance was then revised to minus 4bp plus or minus 1bp, will price within range, with books at Eu1.3bn. The spread was later fixed at minus 5bp, with the book closing at around Eu1.6bn.

“Amid the market conditions, it was a strong result,” said the lead banker.

A syndicate banker away from the leads agreed.

“It is a decent trade – not as mad as the CFF that came right after the election, but still a good result,” he said. “They even left some new issue premium on the table, which is rare these days.”

The deal was deemed to have offered a new issue premium of 1bp-2bp, with bankers seeing SG January 2024s at around minus 8bp, mid. The deal also offered a pick-up of around 10bp versus the sovereign, bankers said, with the May 2025 OAT seen at around 15bp.

The deal is Société Générale SFH’s second benchmark covered bond this year, following a Eu750m seven year issue in January.