A possible deal from ANZ is the only candidate in the announced pipeline, after the bank scheduled a roadshow for a covered bond and/or senior transaction. But after the busiest October in three years, supply is at its highest year-to-date level for the first 10 months since 2011.

ANZ on Wednesday announced that it has mandated itself and HSBC to hold investor meetings from 12 November, following the Australian bank’s latest results, with a view to issuing an intermediate tenor Reg S euro benchmark in senior and/or covered format.

The issuer’s last euro benchmark covered bond was a EUR750m seven year deal in November 2016, while the last Australian euro benchmark was a EUR1bn five year issue for Commonwealth Bank of Australia in mid-April, priced at 5bp over mid-swaps.

No other covered bond mandates have been announced for the coming days or weeks, but Sumitomo Mitsui Banking Corporation and MünchenerHyp achieved successful Japanese and green firsts, respectively, amid more stable conditions on Tuesday, and sentiment going into the end of the week has been positive.

A syndicate banker also noted that amid the still less than ideal conditions, covered bonds have proven a bright spot in the primary market, with no other FIG supply having hit the market for the past 11 days – although public holidays across Europe yesterday (Thursday) contributed to a quite end to the week.

And BayernLB analysts noted that this week’s two “eye-catching” transactions came after a “gratifyingly lively” previous week that had defied concerns about Italy and volatility in the equity and Bund markets.

Indeed covered bond issuance through October was the highest for the month in the last three years, at some EUR11bn.

Year-to-date euro benchmark covered bond supply is now some EUR128bn, which ING analysts noted is well ahead of EUR104bn in the first 10 months of last year and the highest since 2011. The EUR128bn figure is far ahead of the numbers expected at the end of last year, when analysts mostly forecast EUR100bn-EUR110bn of supply in the whole of 2018.

“Supply exceeded redemption payments by EUR2bn in October and is now a chunky EUR51bn higher than the year-to-date redemption payments,” added the ING analysts. “Thus far this year there has only been one month (June) where supply didn’t top redemptions.”

They said that November supply is expected to modestly surpass EUR5.8bn of redemptions due this month.

YTD issuance from a historical perspective

Source: ING