Demand for a EUR500m no-grow seven year conditional pass-through issue today (Wednesday) for Achmea proved disappointing, with only around EUR590m of orders placed for the first CPT to fall foul of ECB APP rule changes in December. BPCE meanwhile sold its largest deal since 2011.

Achmea Bank leads Barclays, Deutsche, DZ, Rabobank and UniCredit went out with initial guidance of the 19bp area for the EUR500m no-grow seven year Dutch CPT issue this morning and did not report books above EUR500m until some two and a quarter hours later. Pricing was set at 18bp over more than three after books were opened, with the last update putting demand at EUR590m, including EUR10m of joint lead manager interest.

“In the end it was oversubscribed, but we would have hoped for better dynamics,” said a syndicate banker at one of the leads. “For a couple of reasons that are difficult to nail down, it did not pan out as expected.”

He put fair value at 13bp-14bp over, based on Achmea November 2024s being at 10.5bp-11bp over, mid, pre-announcement, noting that this implied a new issue premium of at least 5bp for the initial guidance – in line with recent, more successful issuance – and a final NIP of 4bp-5bp – higher than premiums of 2bp down to negative numbers that deals in the past fortnight have achieved.

“So that’s why we are a bit puzzled,” added the lead banker.

The deal is the first CPT benchmark this year that would have been eligible for CBPP3 but is now ineligible for APP reinvestments after the ECB in December said it would exclude CPTs from 1 January.

The lead syndicate banker said “a couple” of investors declined to participate due to the structure, but that this was no different to CPTs in the past, when some investors have chosen not to participate for a variety of reasons.

“I don’t think there are too many investors out there who benchmark their strategies based on ECB decisions,” he said. “And investors are already paid for buying into CPTs to a certain extent.

“Nevertheless, in previous CPTs there were indeed higher oversubscription levels and given that this new issue was executed in an extremely receptive market we would have expected more interest.”

Some investors indicated they were full on seven year paper, after recent supply, he added.

The book included around 65 investors and was good quality, according to the lead syndicate official, with the low absolute size of the book partly due to investors placing orders for smaller tickets.

BPCE SFH’s result was more in line with the highly oversubscribed supply of recent weeks, although the oversubscription ratio was lower and the new issue premium was closer to those achieved on Monday than preceding flat to negative levels.

Leads BBVA, Crédit Agricole, Commerzbank, HSBC, ING and Natixis went out with initial guidance of the mid-swaps plus 18bp area for the September 2027 euro benchmark after the mandate was announced yesterday (Tuesday) afternoon. The book was above EUR1.5bn after around an hour and a quarter, and after around two hours guidance was revised to 16bp+/-1bp, WPIR, on the back of orders above EUR1.9bn. The eight and a half year deal was ultimately sized at EUR1.75bn and priced at 15bp over, with EUR2.1bn good at re-offer, shy of a peak of EUR2.2bn.

A lead syndicate banker put the new issue premium at 2bp, in line with the premium paid by ING for a EUR2bn 10 year on Monday. Caffil issued a EUR1bn eight year yesterday flat to fair value, but the lead banker noted this benefited from being limited in size and the first French social covered bond, whereas BPCE is growing its presence in the bond market following the integration of CFF into the group. The deal is BPCE’s largest since a EUR2bn five year in 2011.

A syndicate banker away from the leads said the sizing at EUR1.75bn versus peak demand of EUR2.2bn could limit the deal’s performance, particularly if investors put in inflated orders given recent market conditions, but the lead banker said the book was high quality, with no trading-oriented accounts, and that some investors were disappointed they did not receive higher allocations.