RBC printed the outstanding deal of the post-summer market today (Thursday), taking around EUR2bn of orders for a EUR1.5bn seven year covered bond, while SG evinced the strength of five years with a EUR750m issue, the duo restoring confidence after lacklustre days.

Although bankers remained optimistic about market conditions, a succession of average to underwhelming deals in had sapped momentum from the newly reopened market in recent days, with a EUR500m seven year deal for Crédit Agricole yesterday (Wednesday) deemed the weakest yet.

“Thankfully it’s a different story today,” said a syndicate banker who worked on Crédit Agricole’s deal and one of today’s new issue. “To be honest we were a bit shocked by the response to yesterday’s trade, but today things feel much better.”

Following a mandate announcement yesterday (Wednesday) afternoon, Royal Bank of Canada (RBC) leads ABN Amro, Commerzbank, Danske, RBC and SG launched the Canadian’s seven year euro benchmark with guidance of the 9bp over mid-swaps area this morning.

The spread was then set directly at 6bp with books over EUR1.8bn, before the size was fixed at EUR1.5bn with books around EUR2bn, pre-reconciliation.

“It is clearly the standout trade of the market so far, getting the biggest book and by far the biggest size,” said a syndicate banker away from the leads. “All that at a very slim new issue premium.”

A syndicate banker at one of the leads said the new issue was exactly the kind of deal investors had been waiting for.

“We have seen good demand for non-CBPP3-eligible covered bonds for a few weeks, especially from Canada and Australia, on the back of some anticipation of tapering of the ECB’s covered bond purchases,” he said. “Investors have been waiting for a juicy positive spread like this.

“There is probably a bit of a negative bias towards Eurozone issuers, as spreads haven’t been performing well, and I get the feeling some investors will just pass on another Eurozone trade. For this deal, however, it felt like everyone jumped on board like it was exactly the deal they were looking for.”

Bankers added that demand was likely supported by the relative rarity of euro-denominated RBC paper. The issuer had been absent from the euro market for over two years until it returned on 21 June with a EUR1.5bn five year, for which demand peaked at over EUR2.6bn.

Bankers said today’s deal offered a final new issue premium of around 1bp, seeing TD June 2025s – the most recent seven year Canadian benchmark – at around 5bp, mid. They also saw RBC June 2023s – which were priced at 2bp over mid-swaps in June – at around 2bp, mid.

In spite of the aforementioned concerns about Eurozone issuers, Société Générale SFH showed that they can still reel in big demand.

Leads Commerzbank, HSBC, Lloyds, Mediobanca, SG and Swedbank launched the five year euro benchmark obligations de financement de l’habitat with guidance of the mid-swaps minus 2bp area.

The deal was ultimately fixed at minus 6bp and the size at EUR750m with books over EUR1.8bn.

“A 4bp move in spread is one of the best we’ve seen since the market reopened, and in terms of demand of course it far surpasses its peer yesterday,” said a syndicate banker away from the leads. “This was clearly to investors’ liking.

SG’s deal was deemed to have paid a final new issue premium of around 4bp, with bankers citing SG SFH January 2026s – the issuer’s most recent benchmark, which was sold on 18 June – at around minus 5bp.

Bankers said the issuer had adopted a notably more defensive approach to pricing than Crédit Agricole, which was judged to have offered an initial premium of 4bp-5bp – although the size of Crédit Agricole’s trade was limited at EUR500m.

Today’s deals are the first post-summer euro benchmarks not to have the issuance size limited to be EUR500m no-grow.

Besides the more generous pricing, bankers attributed SG’s success to the deal’s shorter tenor, with five years being the shortest maturity seen on a new benchmark since the market reopening.

“Among the accounts that are still looking at CBPP3-eligible deals, the five year – or maybe even the four year – area is now definitely the sweet spot,” said one. “The message today is that if you’re a Eurozone issuer then you should keep it short, but if you’re outside the Eurozone, just go for it.”