Covered bond issuance resumed with an encouraging rhythm today (Tuesday), said bankers, as Aareal and Eika Boligkreditt attracted strong demand for EUR500m seven year deals without deviating from pre-summer patterns. RLB NÖ-Wien and pbb are due tomorrow.

Today’s deals were the first euro benchmark covered bond issues since 18 July. With relatively heavy supply expected in the coming weeks, bankers said the reception for the Norwegian and German issues set a promising template.

“If these trades pre-define the rhythm for the upcoming ones then I don’t think anyone would complain,” said a syndicate banker.

Eika Boligkreditt announced yesterday (Monday) that it had mandated Commerzbank, Deutsche, ING, Santander and UBS for its EUR500m no-grow seven year. The deal was launched with guidance of the 7bp area this morning and ultimately priced at 3bp, with books surpassing EUR1.3bn.

Bankers said the deal paid a new issue premium of 1bp-2bp, seeing Eika Boligkreditt February 2025s at around flat, mid.

Following a mandate announcement yesterday morning, Aareal leads DZ, LBBW, Natixis, NordLB and SG launched the EUR500m no-grow July 2025 mortgage Pfandbrief this morning with guidance of the mid-swaps minus 5bp area.

After just over 40 minutes, the leads announced that books were over EUR500m, excluding joint lead manager interest. The spread was subsequently set at minus 8bp with books above EUR1bn, including EUR85m joint lead manager interest, pre-reconciliation.

Syndicate bankers said the deal paid a new issue premium of around 2bp, seeing Aareal July 2024s at minus 12bp, mid. Syndicate bankers at the leads also cited as comparables UniCredit October 2023s at minus 14bp and May 2026s at minus 13bp and three 2025 outstandings of Commerzbank, trading between minus 13bp and minus 10bp.

It is understood that the ECB’s order for the deal was of around 30% of the issue size, in line with the Eurosystem’s approach before the summer break.

Based on today’s two trades, bankers said that outright spreads and new issue premiums were roughly in line with those seen before the summer break.

“When we – and the guys on the Eika trade too, it seems – determined our strategies, we stuck to the proven patterns that were worked out pre-summer, as we felt there was no need to adjust the modalities here,” said a syndicate banker that worked on Aareal’s deal. “It seems we were proven right.”

The last benchmark German Pfandbrief before the summer break was a EUR500m 10 year issue for BayernLB on 10 July, which was priced at mid-swaps minus 9bp. The last Norwegian euro benchmark was a short five year for Sparebanken Vest Boligkreditt priced at 1bp on 3 July.

Raiffeisenlandesbank Niederösterreich-Wien announced a mandate this morning for a EUR500m no-grow eight year public sector covered bond, via leads Commerzbank, DZ, Helaba, RBI and SG. The deal is expected to be launched tomorrow.

Syndicate bankers at the leads saw the Austrian issuer’s September 2024s trading at minus 5bp, mid, its March 2025s at minus 3bp, and its January 2028s at minus 1bp, pre-announcement.

This afternoon Deutsche Pfandbriefbank (pbb) followed with a mandate announcement for a EUR500m no-grow nine year mortgage Pfandbrief. Barclays, BayernLB, DZ, SG and UniCredit have the mandate for the German deal.

pbb May 2023s were seen pre-announcement at minus 11bp, mid, and May 2024s at minus 9bp.