The euro benchmark covered bond market extended its frenzy of activity today (Wednesday) as six issuers tapped into the resurgent demand for paper, with a EUR1bn five year OBG for Banca MPS showing the options on offer – even if it required paying the highest Italian spread since 2013.

Priced at 190bp over mid-swaps, the EUR1bn five year OBG of Banca Monte dei Paschi di Siena offered the highest spread on a benchmark covered bond outside Greece or Turkey since a Banco Mare Nostrum EUR500m five year cédulas in January 2014, which was priced at 190bp over, and the highest from Italy since October 2013, when Banca Carige paid 270bp over to issue a EUR750m five year OBG.

However, the covered bond market proved open to the Italian lender in spite of the scrutiny it has come under from – among others – the European Central Bank, while its travails meant that a planned Tier 2 issue late last year was unfeasible.

Today Banca MPS attracted more than EUR2.3bn of orders to its conditional pass-through (CPT) OBG – rated A1/A+/AA (low) by Moody’s, Fitch and DBRS – enabling guidance to be tightened from initial price thoughts of the low 200s.

With BTPs trading in the 160s over mid-swaps in the five year part of the curve, Banca MPS’s OBG offered a significant pick-up over its sovereign, unusually for Italian covered bonds but something bankers had said would be key to attracting investors to the offering. The only other Italian benchmark this year was a EUR750m five year for Credito Emiliano on 10 January that was priced at 95bp over mid-swaps, equivalent to around 85bp though BTPs.

The Italian trade was just one of six euro benchmarks in the market today, following six tranches from five issuers totalling EUR6bn yesterday (Tuesday) that analysts said was a daily record. Today’s issuance has also already taken this month’s issuance past the total for the whole of January 2018 – but the market showed little sign of cooling.

SpareBank 1 Boligkreditt went out with guidance of the mid-swaps plus 27bp area for a 10 year euro benchmark, and revised guidance to 24bp+/-1bp, WPIR, on the back of books above EUR2bn. A EUR1.25bn deal was ultimately priced at 23bp over on the back of more than EUR2.4bn of orders. A lead syndicate banker put the new issue premium at 1bp.

“It was a super outcome from start to finish,” he said. “There’s definitely structural demand for 10 year and longer maturities and investors are very keen on buying Nordic and particularly Norwegian covered bonds.”

He noted the trade came flat to the EUR1bn 10 year tranche of a Crédit Mutuel-CIC transaction yesterday, and said that Scandinavian covered bonds are expected to trade inside French names going forward.

Close to 100 accounts participated, according to the lead banker, who said that the book was also of “superb” quality, with great representation of asset managers and insurance companies.

DZ Hyp opened books on a 10 year euro benchmark with guidance of the mid-swap plus 13bp area, and revised guidance to 11bp+/-1bp, WPIR, after having attracted more than EUR1.5bn of demand in less than an hour. The transaction was then sized at EUR750m and priced at 10bp over, with the final book above EUR2.1bn.

The deal is the second German benchmark of the year and proved much more successful than the previous one, a EUR500m trade for UniCredit Bank AG (HVB), which had a book above EUR600m and was priced at 15bp over mid-swaps on 4 January.

A lead syndicate banker said the re-offer level of 10bp on DZ Hyp was equivalent to a new issue premium of 2bp.

“More or less everybody accepted the plus 10bp,” he said. “We started with a new issue premium equivalent to 5bp and left an eventual 2bp on the table – that’s not a lot, but that’s how it goes these days.”

Deals for La Banque Postale and Fédération des caisses Desjardins du Québec showed a degree of moderation in spite of the buoyant market, with pricing on each only moving 2bp from start to finish – the lowest this week apart from a Deutsche Pfandbriefbank deal on Monday whose guidance was limited by WPIR language from the outset (see separate article for more on the new issue pricing process).

However, both were comfortably oversubscribed and, like the other supply, kept new issue premiums down. La Banque Postale priced its EUR750m seven year benchmark at 15bp over mid-swaps on the back of some EUR1.25bn of orders following initial guidance of the 17bp area, and a banker away from the leads put the new issue premium at just 1bp.

Fédération des caisses Desjardins du Québec launched the fifth five year Canadian euro benchmark of the year and had the lowest level of oversubscription on any euro benchmark this week. Having gone out with guidance of the 20bp over mid-swaps area, the issuer priced a EUR750m trade at 18bp over on the back of over EUR1bn of orders.

The spread is 2bp more than that paid by compatriot RBC on a EUR1.75bn five year yesterday, but flat to where BMO, BNS and NBC priced deals in the maturity earlier this month – all four preceding deals were quoted at 16bp over, mid, ahead of FCDQ’s announcement. A banker away from the leads said the pricing was a decent result given that the issuer can trade wider than its peers.

De Volksbank set initial guidance on a EUR500m no-grow seven year issue at 18bp over mid-swaps and was able to move to 14bp over on the back of some EUR1.5bn of demand.

Compatriot Rabobank is planning a 10 year benchmark via BNP Paribas, Deutsche, HSBC, NatWest and Rabobank, which is expected tomorrow, although syndicate bankers said the pace of supply could ease, with other issuers probably not feeling so confident to come on the day of an ECB governing council meeting.