A EUR500m short four year issue for Commerzbank and a EUR500m seven year for ASB met similar receptions amid a softer market today (Monday), attracting around EUR700m of orders and generating limited pricing momentum to print with relatively generous concessions.

Deals from ING Belgium and Crédit Agricole closed the covered bond market last week on a positive note, with ING’s EUR1bn eight year drawing EUR1.8bn of demand on Thursday and Crédit Agricole’s EUR1.5bn dual tranche deal attracting combined orders of more than EUR2.5bn on Friday.

Bankers partly attributed the more modest reception afforded today’s deals to issuer-specific causes, namely the tight outright spread of Commerzbank’s offering and the more limited buyer base for ASB Finance Limited and New Zealand paper, but also blamed a slight softening in market conditions.

“If you look at the dynamics, rates are up quite a bit, credit indices are wider, and there is definitely softer sentiment today,” said a syndicate banker. “The covered bond market is working, but there are a lot of products out there, so you need to be patient and also careful in terms of your starting point.”

Commerzbank’s August 2022 issue was launched by Commerzbank, Credit Suisse, Mediobanca, Natixis and UniCredit with guidance of the mid-swaps minus 7bp area this morning. The spread was later fixed at minus 8bp and the size at EUR500m with books over EUR700m, including EUR36m joint lead manager interest.

“It is not a bad book in the end,” said a syndicate banker at one of the leads.

The final spread incorporated a new issue premium of around 6bp based on the issuer’s secondary curve, according to bankers at and away from the leads.

The deal follows a EUR500m August 2022 covered bond for Crédit Agricole Home Loan SFH on Friday, which was sold as part of the EUR1.5bn dual tranche offering. Bankers said the French deal, which was priced upon a final book of over EUR1bn, showed demand was strong for such short maturities.

Commerzbank’s deal is the shortest dated euro benchmark Pfandbrief since July 2017, when HSH Nordbank sold a EUR500m three year. Between HSH’s deal and Crédit Agricole’s short four year on Friday, only Greek issuers sold euro benchmark covered bonds in the three year part of the curve.

Following the completion of a European roadshow on Friday, ASB Finance Limited leads Barclays, CBA, DZ and UBS launched the EUR500m no-grow seven year issue this morning with guidance of the mid-swaps plus 18bp area. After around one hour and 45 minutes, the leads announced that books had surpassed EUR500m.

Around one hour and 50 minutes later, the spread was set at 16bp with books at EUR700m, including EUR15m joint lead manager interest.

The deal is the Commonwealth Bank of Australia subsidiary’s first benchmark covered bond since October 2017 and only the second benchmark covered bond from New Zealand this year, following a EUR750m seven year issue for BNZ in June.

Bankers said the deal paid a new issue premium of around 6bp versus the issuer’s curve, seeing ASB Finance October 2023s at 8bp and October 2024s at 9.5bp. BNZ July 2025s were seen at around 13bp.