BPCE SFH secured size and duration with a Eu1bn 10.5 year covered bond issued flat to mid-swaps today (Wednesday), although with the book standing at around Eu1.3bn and the spread tightened 2bp from initial guidance, the result was deemed more modest than a trio of recent French 10 years.

The issuer’s Eu1bn no-grow April 2028 deal was announced this morning by leads BNP Paribas, JP Morgan, Natixis, NordLB and UniCredit with guidance of the 2bp over mid-swaps area. Guidance was later revised to the flat area on the back of books in excess of Eu1.2bn, excluding joint lead manager interest. The spread was ultimately set at flat with books at Eu1.3bn.

“To get Eu1bn of 10 year funding at flat to mid-swaps is an outcome BPCE can be pleased with,” said a syndicate banker away from the leads. “They have secured good size and duration.”

The new issue follows three straight 10 year euro benchmark covered bonds issued out of France last month, a Eu1.25bn issue for CM-CIC on 6 September, a Eu750m issue for Caffil on 18 September and a Eu500m issue for Crédit Mutuel Arkéa on 25 September.

All three were priced 5bp inside initial guidance – CM-CIC’s deal flat to mid-swaps and the latter two at minus 2bp, being the tightest French 10 years since October 2016 – and attracted greater demand than BPCE’s trade.

A syndicate banker away from the leads suggested demand for the new issue may have been limited because BPCE started with tighter initial guidance and attempted to tighten the spread more aggressively.

“In my view, at these tight levels and at this part of the curve, it was a bit aggressive to tighten the spread by 2bp with an oversubscription of just Eu200m,” said a syndicate banker away from the leads. “If you deduct the ECB’s share of the deal, it was a bit of a stretch.

“The fact they priced at flat suggests they recognised there was some sensitivity in the book. You can do deals this way, but I think the first step was a bit too harsh in this tenor bucket.”

The September-October 2027 issues from CM-CIC, Caffil and Crédit Mutuel Arkéa were seen trading at minus 6bp-5bp this morning. Bankers noted that BPCE’s covered bonds tend to trade around 5bp back of those of the three issuers, implying that the deal was priced close to fair value.

Maureen Schuller, head of financials research at ING, noted that by issuing a 10.5 year bond, BPCE was targeting a relatively lightly supplied part of the curve, with Eu2.5bn of 2028 French benchmark covered bonds outstanding compared with Eu10.2bn of 2027 paper.

WL Bank tapped by Eu250m a Eu250m June 2026 Pfandbriefe at a spread of minus 15bp today, via leads DekaBank and Helaba.