ANZ NZ, Caffil and NBC added a combined EUR2.75bn of issuance to the new year slew of supply today (Tuesday), but oversubscription levels and pricing outcomes suggested spreads may be approaching a new equilibrium. Helaba and UniCredit Austria have meanwhile joined the pipeline.

“We had the impression everything went OK,” said a banker involved in one of today’s deals. “The issues are characterised by not trying to squeeze out the last basis point nor the last quarter billion.

“The issuers were all truly conservative and acted responsibly.”

But while issuers may have thus far had to yield somewhat to investors to get their deals away, the banker said there are encouraging signs spreads are stabilising.

“It seems the market is happy with the levels as they now stand,” he said. “Investors are not demanding 5bp more every three hours.

“It remains to be seen how the situation develops, but it’s promising.”

National Bank of Canada (NBC) priced the third Canadian five year euro benchmark in four business days, pricing a EUR750m (C$1.15bn) trade flat to the 18bp spread paid by Bank of Montreal on Thursday and Bank of Nova Scotia on Friday for EUR1.25bn issues.

Leads Crédit Agricole, HSBC, LBBW, NBC and RBC went out with guidance of the mid-swaps plus 20bp area, plus or minus 2bp will price in range (WPIR). After a little over an hour and a half books topped EUR900m, and after almost three hours the pricing was fixed at 18bp with books in excess of EUR1.2bn.

A banker at one of the leads said the deal had gone well in a busy market, where nine tranches were issued across covered bonds and senior unsecured. He said that despite NBC coming after BMO and BNS, the oversubscription achieved showed that it had come to the market when appetite for Canadian issuance remained.

“We continue to see a fairly broad repricing in covered bonds,” he added, “but we seem to be at something of an inflection point for the Canadians, with investors continuing to see value at these levels.”

He noted that relative value is returning towards pre-CBPP3 levels, with French names, for example, now trading not far inside Canadian names, although he said this has a little further to go.

A lead banker on Caffil’s two-tranche trade said that the disappearing differential between CBPP3-eligible and non-CBPP-eligible issuance was attracting investors back to the market for Eurozone paper.

“Spreads on French paper are more commensurate with Canadian paper,” he said, “and that certainly helps.”

He cited this as a factor in Caffil achieving a new issue premium that he put as low as 2bp on the EUR750m six year tranche of today’s deal, which also incorporated a EUR500m 15 year. Leads Barclays, Citi, Natixis, Santander and SG built a combined book of around EUR2.4bn, skewed towards the shorter-dated tranche, according to the lead banker.

Initial guidance for the six year was the 19bp area and for the 15s the 32bp area, and these were revised to the 17bp area and the 31bp area, respectively, both plus or minus 1bp WPIR. The lead banker put the new issue premium of the 15 year at 6bp.

“It went very well,” he said. “They clearly could have printed more should they have wanted to, but were a bit more focused on spread.”

He said that this was particularly the case on the six year tranche, noting that the 3bp tightening was “unusual” so far this year.

ANZ New Zealand priced a EUR750m (NZ$1.27bn) five year covered bond at 33bp over mid-swaps, after having gone out with guidance of the 35bp area, plus or minus 2bp WPIR, for a benchmark-sized trade. Leads ANZ, Barclays, BNP Paribas and DZ built set the spread at 33bp after around two and a quarter hours on the back of more than EUR1bn of demand, and the book ultimately totalled around EUR1.4bn, with over 70 accounts involved.

A lead syndicate banker said the trade was “very convincing”. He put the new issue premium at 5bp-6bp over.

A banker away from the leads said the magnitude of the broader spread widening was underlined by the New Zealand bank having today paid a spread for its covered bond in line with what was in March 2018 levels for its senior unsecured issuance, with ANZ NZ having then sold a two year longer, EUR500m seven year senior deal at 40bp over mid-swaps.

Helaba has mandated a dual-tranche, long threes and sevens trade that is expected tomorrow via Barclays, BayernLB, Crédit Agricole, Deutsche, Helaba, Natixis and Santander, while UniCredit Bank Austria has mandated a EUR500m seven year mortgage Pfandbrief to Erste, Crédit Agricole, ING, LBBW and UniCredit.