BNZ took advantage of the certainty of covered bonds amid a cautious broader market while printing a EUR750m seven year deal today (Tuesday), taking over EUR1bn of orders. Commerzbank meanwhile doubled in size an outstanding EUR500m issue.

BNZ International Funding Limited leads Barclays, DZ Bank, HSBC and NAB launched the deal this morning with guidance of the mid-swaps plus 18bp area. After around one hour and 40 minutes, the leads announced that books were over EUR750m, including EUR75m joint lead manager interest.

The spread was subsequently set at 15bp with books around EUR950m, including EUR75m JLM interest. The size was later set at EUR750m with books over EUR1bn, including EUR75m JLM interest.

“To have than EUR1bn of allocatable orders for a EUR750m trade is, given the quality of the book, a very decent level of oversubscription, on the basis of which we could operate well,” said a syndicate banker at one of the leads. “It is a solid book, if not exactly a wild one, and we were able to do an adequate and well diversified allocation.”

The deal is the first euro benchmark covered bond from New Zealand since October 2017 and BNZ’s first since June 2017, when it priced another EUR750m seven year, also at a re-offer spread of 15bp over mid-swaps.

Bankers at and away from the leads said the deal paid a new issue premium of around 6bp, seeing the BNZ July 2024s – the issuer’s longest dated outstanding – now quoted at around 9bp, mid.

BNZ held a roadshow marketing a senior unsecured or covered bond euro benchmark transaction last week, before opting for the latter and announcing a mandate for the seven year covered bond yesterday (Monday). Bankers said the decision made sense given that the broader market remains subject to political volatility.

“The level of execution certainty is clearly a lot higher in covereds than in senior,” said the lead syndicate banker. “The senior market still feels like it can close on short notice.”

After announcing a mandate yesterday for a EUR250m minimum tap, Commerzbank leads ABN Amro, Commerzbank, DZ, Santander and SG reopened the outstanding EUR500m May 2025 Pfandbrief this morning with guidance of the mid-swaps minus 6bp area.

The leads later announced that books were over EUR500m and subsequently revised guidance to the minus 7bp area, plus or minus 1bp will price in range, for an expected size of EUR500m, on the back of more than EUR600m of orders, excluding JLM interest. The spread was then fixed at minus 7bp and the size at EUR500m, taking the new outstanding size to EUR1bn.

The EUR500m deal was priced at mid-swaps minus 9bp on 18 May and seen trading at around minus 11bp before the tap was announced.

Following today’s deal, Commerzbank has printed EUR3bn of euro benchmark covered bonds this year.

Oma Savings Bank announced yesterday morning that it had mandated Danske, LBBW and Nordea for a EUR100m no-grow tap of its EUR250m December 2022 covered bond. The deal was reopened with guidance of the mid-swaps plus 6bp area this morning, and after around two hours and 20 minutes the spread was fixed at 6bp. The size of the book was not disclosed.

The December 2022 issue was Oma’s first sub-benchmark covered bond. It was priced at 1bp over mid-swaps last December and seen at around 2bp, mid, before the tap was announced.

Mortgage Society of Finland EUR250m April 2023s were seen at 5bp, mid, and EUR300m June 2024s at 3bp, while Møre Boligkreditt EUR250m June 2022s were seen at 5bp and EUR250m June 2023s at 5.5bp.