Crédit Agricole attracted around EUR1.8bn of demand to price a EUR1.25bn long eight year deal at a new issue premium of around 4bp today (Monday), showing the market remains constructive, even if a UBI two-trancher was more modestly received. Caffil, Erste and UOB are expected tomorrow.

A softer tone evident in the second half of last week dampened expectations as to how buoyant the New Year new issue market would prove, but Crédit Agricole was confident enough to announce its mandate for the new issue on Friday afternoon.

“We took the slot and were good to go this morning,” said a syndicate banker at one of the leads, “which was good because the wider financial markets were in a constructive mood, even if investors are somewhat more selective.”

Leads Crédit Agricole, Danske, NordLB, Santander, SG and Wells Fargo then opened books for the February 2026 Crédit Agricole Home Loan SFH deal – with the size characterised as a benchmark – this morning at initial guidance of the 6bp through mid-swaps area. Guidance was revised the minus 9bp area and the size fixed at EUR1.25bn on the back of books above EUR1.75bn, and the re-offer fixed at minus 10bp with the final book above EUR1.8bn.

Bankers at and away from the leads put the ultimate new issue premium at 4bp, with initial guidance having implied around 8bp.

“They have responded to this sort of softness by starting the process fairly generously,” said one. “If this is how they are reacting to conditions and this sort of premium does the trick, then we can look forward to sustained supply.”

The lead syndicate banker said that the initial minus 6bp guidance could be seen as a defensive starting point, but he noted that tightening of 3bp-5bp was anticipated, hence the minus 9bp guidance not carrying the “will price within range” caveat and allowing for minus 11bp.

“We stuck to minus 10bp,” he added, “and 4bp was clearly a very good outcome when we look at the context of current supply, including other French issuance.”

The first signs of weakness in covered bonds were evident on a EUR1bn CFF 10 year on Wednesday on which pricing was tightened from minus 5bp to minus 7bp on the back of a barely oversubscribed book. Caffil meanwhile announced during Crédit Agricole’s execution a two-tranche, eight and 15 year benchmark that is expected tomorrow via Barclays, Deutsche, Natixis, SG and UniCredit.

UBI Banca’s EUR1bn two-tranche, six-and-a-half and 12 year transaction, which was priced in the middle of initial guidance, went “OK”, according to a lead syndicate banker.

“It didn’t provide enough oversubscription to tighten,” he said, “but that was a very reasonable decision by the issuer.

“It’s not something we’ve seen for a while – it has been a bit of a development in recent transactions, like Cariparma last week – but we are dealing with softer markets these days.”

Leads Barclays, BNP Paribas, ING, LBBW, RBI and UniCredit priced EUR500m July 2024 and January 2030 tranches at 10bp and 30bp over mid-swaps, respectively, following guidance of the 10bp and 30bp area that had initially been given for expected EUR500m tranches. A EUR500m no-grow 20 year OBG on Thursday was priced in the middle of 40bp area guidance on the back of books “well above” EUR600m.

UBI’s combined book was EUR1.25bn, excluding joint lead manager interest, with demand said to be slightly skewed towards the shorter piece, which the lead syndicate banker said was in line with recent experience – again noting Crédit Agricole’s success. He put UBI’s new issue premiums in the high single-digits.

A banker away from the leads said that the reasonable size and pricing had been achieved fairly comfortably, and the lead banker said that despite the lack of spread tightening and modest oversubscription, UBI had achieved “a decent outcome”. He added that the levels versus BTPs – around 70bp and 95bp through – could have met with some resistance.

Syndicate bankers put some of the market weakness down to difficulties at the long end of the SSA market, with covered bonds not being immune to that.

However, lead bankers on a 10 year benchmark for Austria’s Erste Group Bank that is expected tomorrow were confident that deal will fare well.

“Ten years may not be the obvious choice,” said an Erste lead banker, “but Erste only does perhaps one benchmark a year and it is the Austrian national champion, rather than being one of the various French names with multi-billion funding requirements. Austrian covered bonds also offer more juice versus the government, coming around 15bp back, which will hopefully prove more attractive to investors.”

Erste outstandings include January 2023s that another lead banker said were at minus 13bp, mid, February 2025s at minus 12bp, and January 2027s at minus 9bp.

Crédit Agricole, Credit Suisse, DZ, Erste and LBBW have the Austrian mandate.

UOB has meanwhile mandated Deutsche, HSBC, NordLB, UBS and UOB for a seven year euro benchmark.