A SR-Boligkreditt Eu500m no-grow seven year benchmark attracted over Eu1.75bn of orders today (Tuesday) without paying a new issue premium, maintaining the market’s impressive run but outside the busy 10 year bracket, which Dapo is due to tap next. Montepio is meanwhile planning a CPT comeback.

SR-Boligkreditt’s deal is only the second seven year euro benchmark in the past three weeks, the other having been a Eu500m issue for PKO last Wednesday. Supply has otherwise been dominated by 10 year deals.

Leads Credit Suisse, HSBC, Nordea, NordLB and SG opened books for the Norwegian’s Eu500m no-grow benchmark with initial guidance of the 4bp over mid-swaps area this morning, before revising guidance to 1bp over, plus or minus 1bp, and ultimately pricing the issue flat to mid-swaps on the back of more than Eu1.75bn of orders, pre-reconciliation and excluding joint lead manager interest – the deal is also outside CBPP3’s remit.

Bankers away from the leads said the deal came flat to fair value, following the trend of the recent 10 year supply, where a couple of issues have even been priced 1bp through fair value.

“We have had a very, very solid run,” said one syndicate banker.

He said he was quite amazed by the book, given the issuer’s modest size, noting that it nevertheless offered diversification. He suggested that seven years was appropriate for such an issuer – and also PKO – saying some investors had maturity limits on smaller institutions, while the seven year maturity at the same time offered a nice pick-up versus five years, of 0.48% versus 0.21% – even if it did not provide the same compensation for extending along the curve as 10 does over seven years, with the long end offering 0.85%.

Another syndicate banker said seven years is very much an option in covered bonds – with the focus on the 10 year maturity being more pronounced in the SSA and Länder markets – and that SR-Bolikgreditt had benefited from undersupply in the maturity.

The last Norwegian euro benchmark was a Eu1bn seven year for SpareBank 1 Boligkreditt on 19 June that attracted some Eu1.4bn of demand. SR-Boligkreditt’s last euro benchmark was a Eu750m long five year in June 2016, and in the meantime it sold a debut $600m five year in April.

Deutsche Apotheker- und Ärtztebank (Dapo) is set to add further 10 year covered bond supply tomorrow (Wednesday), having mandated Commerzbank, DekaBank, DZ and LBBW for a Eu500m no-grow 10 year mortgage Pfandbrief.

The mandate was announced relatively early today, prompting some market participants to infer that it might be today’s business, but a syndicate banker at one of the leads said that this was never the intention, with Dapo keen to announce early to alert Asian investors in particular to the impending trade.

Additional supply is considered a possibility in light of the attractive market conditions.

“It’s too convenient a market not to make use of it,” said one banker, “and if you are a bit concerned about the looking ECB meeting in October you’d go now as this is probably as good as it’s going to get this year.”

Longer term, Caixa Económica Montepio Geral is targeting an intermediate maturity conditional pass-through (CPT) covered bond after a roadshow. JP Morgan, NatWest and UniCredit have been mandated to arrange investor meetings starting on Monday.

The issuer converted an existing programme from soft bullet to CPT format in mid-2016 and has no publicly issued benchmarks outstanding. Its planned deal would be the first CPT benchmark from Portugal.

In sterling, Aareal was in the market today with a short three year fixed rate trade. The books for the June 2020 issue were reported at over £250m for guidance of the Gilts plus 65bp area, with Deutsche, Goldman Sachs and HSBC as leads.