OCBC sold the tightest Singaporean euro covered bond to date today (Thursday), a Eu500m no-grow five year, as the fifth and sixth benchmarks of the week made it the busiest period for the market since the second week of January, with NordLB executing an idiosyncratic Eu500m seven year.

The new issue for Oversea-Chinese Banking Corporation (OCBC) came at mid-swaps flat, which compares with a level of 10bp over by compatriot UOB for a five year in February. The momentum behind the market also enabled OCBC to price marginally inside where a lead syndicate banker estimated a new Australian five year benchmark of their typically larger size would come.

“They reached their dream of pricing through the Aussies,” he said. “It’s just the market for this. People are hungry for paper to invest in and their price sensitivity is extremely limited.”

Leads Barclays, BNP Paribas, Crédit Agricole, DZ, JP Morgan and OCBC went out with initial guidance of the 5bp over mid-swaps area for a benchmark-sized issue, then revised guidance to the mid-swaps plus 1bp area, plus or minus 1bp will price within range, for a Eu500m no-grow, before, after a total of two hours, fixing the spread at mid-swaps flat on the back of a book over Eu1.6bn excluding joint lead manager interest.

The lead banker said that fair value was at mid-swaps plus 1bp, making OCBC just the latest issuer to price slightly inside fair value.

The pick-up offered versus tight Eurozone and Nordic names was cited as a key attraction, with, for example, a CFF September 2022 issue launched in May quoted at minus 13bp, mid.

“That’s the story,” said a banker away from the leads. “They don’t have the CBPP3 distortion.”

NordLB’s Eu500m no-grow seven year public sector Pfandbrief was its first since its Pfandbriefe were downgraded from Aaa to Aa1 by Moody’s in mid-August, with its shipping exposure cited.

ABN Amro, BayernLB, BNP Paribas, Crédit Agricole and NordLB built a book of almost Eu800m, excluding JLM interest, good at a re-offer level of 9bp through mid-swaps. They had gone out with initial guidance of the minus 7bp area.

Based on fair value of minus 12bp, a syndicate banker at one of the leads put the new issue premium at 3bp, making the deal an exception to recent supply’s typical flat to inside fair value pricing.

“It’s not that strong as the other German trades we have seen in the past few weeks, and this is a bit related to the credit story,” he said. “But it is quite juicy compared to the others – it was obvious they would have to pay up a bit more than the others.

“In the end it worked and we could have done the Eu500m even without the ECB, so although it is not the best I’ve seen, it is a good and healthy trade.”

The book comprised close to 50 orders, with Germany taking a 76% share and central banks – not only the Eurosystem – 32%.

Another banker pointed out that the oversubscription and execution compared favourably with NordLB’s last benchmark, a Eu500m 10 year public sector Pfandbrief in January that was priced in the middle of guidance and only just subscribed.