MMB SCF pulled its inaugural covered bond today (Thursday) as an ECB-shaped hole in the book left it with EUR400m of orders for a EUR500m deal, but bankers said the issuer avoided “even worse failure”. BNPP Fortis was able to print a solid yet slow EUR500m seven year.

“A deal has not been postponed in this way for a long time,” said a syndicate banker away from the My Money Bank (MMB) trade. “This is a rarity.”

Leads ABN Amro, BNP Paribas, Crédit Agricole and SG launched the EUR500m no-grow seven year issue with guidance of the mid-swaps plus 15bp area this morning. After more than three hours, the leads announced that the spread was set at 15bp with books at around EUR400m, excluding joint lead manager and issuer interest.

The leads then postponed the deal. In an announcement, the issuer thanked investors for their interest in its inaugural obligation foncières but said they have listened to feedback that accounts need additional time and so will continue to work with accounts to ensure lines are in place before it returns to the market.

Syndicate bankers away from the leads said the decision to postpone was the right one.

“They may look bruised for now, but with the book at EUR400m they were still 20% off the pace, so going ahead would have been bad advice,” said one. “They took the right decision.

“This is a failure, but it would have been an even worse failure if they had pushed to launch this. The market has a short memory, so if they return in a month or so no one will mind this failure, if markets are more receptive at the time.”

Although covered bond issues have in recent months been postponed in the middle of inter-day executions – after a mandate announcement but before books were opened the subsequent morning – bankers said it is years since a euro benchmark covered bond has been postponed in the middle of bookbuilding.

“It is a sign that the days of Eurozone issuers being able to count on the ECB buying 30%, 40% or 50% of your deal when things go bad are over,” said a syndicate banker away from the leads.

The ECB this week reduced the size of its typical order for primary market covered bond issues settling from October onwards, placing orders of around 10% for a EUR500m Deutsche Kreditbank deal on Tuesday and La Banque Postale’s EUR750m deal yesterday, after having typically placed bids of 30% previously.

Bankers noted that if the ECB’s bid for the My Money Bank deal had been of 30% rather than 10% the deal would have been subscribed.

“Then they could have at least got the deal done and printed at 15bp,” said one.

The smaller ECB bid combined with investor sensitivity in challenging broader market conditions, said bankers, noting that deals in other markets had a difficult time today – with a Credit Mutuel Arkea senior preferred bond sized at the lower end of the EUR500m-EUR750m indicated range after EUR150m of orders dropped out the book.

Some bankers away from the leads questioned whether the issuer’s investor work had been comprehensive enough.

My Money Bank announced a mandate for a roadshow marketing the deal on 13 September and hit the road the following week.

“I was talking to our treasury, and some of them had never heard of My Money Bank before,” said a syndicate banker. “There have been so many new issuers coming to the market in recent weeks, and sometimes an issuer can get forgotten.”

My Money Bank was established as an independent French bank in April 2017 following the sale of GE Money Bank to funds managed by Cerberus Capital Management. GE Money Bank had previously been active in the French covered bond market via subsidiary GE SCF, but when GE Money Bank was sold GE SCF did not go with it but was transferred to another GE entity to be wound down.

Syndicate bankers highlighted that the 15bp spread was highly attractive for a French covered bond. Bankers estimated that fair value for a new seven year issue from some of the established, highest quality French issue would have been around flat to mid-swaps today.

The deal follows a EUR750m 10 year issue for compatriot La Banque Postale yesterday (Wednesday). La Banque Postale’s longer deal was priced at 3bp over mid-swaps, 12bp inside the level at which My Money Bank’s deal would have landed.

Bankers said LBP’s rarity as a covered bond issuer and its position as one of the strongest credits in the French market meant it was able to smoothly print a successful deal – attracting EUR1bn of orders with a new issue premium of around 4bp – without having to pay up on account of the ECB’s reduced participation.

Despite getting off to a slow start, BNP Paribas Fortis was meanwhile able to get over the line convincingly today.

“It’s not a blowout, but it’s a solid print,” said a syndicate banker away from the leads.

Leads BNP Paribas, BBVA, Commerzbank, Danske, ING, Lloyds, NatWest and Nordea launched the EUR500m no-grow seven year issue with guidance of the 4bp over mid-swaps area this morning. After around one hour and 30 minutes, the leads announced that books were above EUR500m.

Another one hour and 30 minutes later, the spread was fixed at 2bp with books over EUR600m. The final book stood at EUR700m good at re-offer.

“It really was very slow,” said another syndicate banker away from the leads. “But in the end, knowing the ECB once again bid only 10%, they got plenty of demand from elsewhere and the deal would have sold convincingly without the ECB.”

Bankers said the deal paid a final new issue premium of 5bp-6bp versus the issuer’s curve.