Deutsche Pfandbriefbank and UniCredit found the going tough in dollars and euros today (Tuesday), with overnight falls in US equities and renewed Italian budget headlines meaning pbb’s $600m three year deal was only just subscribed and UniCredit paid up to sell its seven year Pfandbrief.

The German issuers had announced their mandates yesterday (Monday), but encountered unfriendly conditions when entering the market this morning.

UniCredit leads BBVA, Commerzbank, LBBW, Natixis and UniCredit went out with initial guidance of the mid-swaps plus 1bp area for the seven year euro benchmark, and after around an hour gave an update with books above EUR500m, excluding joint lead manager interest. Around 45 minutes later, they set the spread at mid-swaps flat on the back of EUR750m of orders, and the final book was around EUR900m.

The pricing is 5bp wider than that achieved by DZ Hyp with a EUR1bn seven year issue last Tuesday (6 November) that attracted EUR1.2bn of orders. A syndicate banker said that in recent times the spread differential between UniCredit and DZ Hyp was around 2bp in the secondary market, and that UniCredit might therefore have hoped to price at minus 3bp or 2bp on a better day.

“They offered a juicy pick-up of 8bp at the beginning, but were only able to tighten it 1bp,” he added.

His estimate of the new issue premium, of 7bp, was in line with that of a syndicate banker at one of the leads, who put it at 6bp-7bp, based on where more recent trades were quoted rather than UniCredit’s secondary spreads, which are deemed squeezed.

However, the lead syndicate banker said that in light of market conditions the final outcome was a “strong result”, with 60 orders constituting the EUR900m of demand.

“We certainly had a few accounts not getting involved because the ongoing talks between Italy and the EU were at the forefront of their minds,” he said, “but there were still enough who saw value in the trade.

“We were surprised that a few accounts are saying they are done for the year,” he added, “not the major asset managers, but some here or there.”

This was echoed by a syndicate banker away from the leads, who said that many investors are not willing to risk further negative performance this year.

However, a syndicate banker involved in Deutsche Pfandbriefbank’s issue said that even if oversubscription levels are not great, the quality of books is better than it was a month or so ago, with there being less order inflation, and fewer opportunistic or trading oriented accounts involved.

The $600m (EUR532m) three year Deutsche Pfandbriefbank (pbb) Reg S issue was covered, according to the lead banker, with some accounts getting involved only after the final pricing of 35bp over mid-swaps was confirmed and after a final book update of $450m was given – which had led bankers away from the deal to suggest it might not have been fully subscribed.

“We would have expected a bit more demand,” he acknowledged, “but the book was finally covered and the accounts that joined the book are good buy and hold ones. We could therefore print the LCR-eligible $600m size.”

The lead banker said that following the US market moves yesterday the issuer and its leads had discussed whether to adapt their approach, but that they received firm responses from accounts that gave them the confidence to proceed with the deal. However, the leads went straight out with guidance of the 35bp area rather than initial price thoughts, to give more clarity, he added.

The pricing of 35bp over was equivalent to around 8bp over mid-swaps in euros, he estimated, noting this would therefore offer a very attractive pick-up for investors able to do the swap, but that the book included buyers who would stick with dollars, and that pbb itself has assets in US dollars.

HSBC Bank Canada is expected to launch its inaugural covered bond soon, a US dollar three year issue, with Fitch and Moody’s having today announced provisional triple-A ratings for the issuance. The issuer received regulatory approval for covered bond issuance out of Canada in August.

TSB has mandated a five year Sonia-indexed FRN covered bond for launch after investor meetings running from today, following similar trades from building societies Coventry and Yorkshire last week. Lloyds, NatWest, Nomura and Sabadell are joint leads.