Crédit Agricole Italia and Portugal’s BPI priced new issues flat to fair value today (Friday) on the back of order books that were at least six times subscribed, with the ECB’s dovish stance and confirmation of TLTRO III last week cited as having boosted demand for peripheral credits in particular.

The Italian and Portuguese banks were able to tighten pricing by at least 10bp from initial guidance, and a syndicate banker said investors showed little price sensitivity. He added that as well as being high quality, investors were putting in big orders, noting that the 10 biggest orders alone would have been large enough to cover one of the trades.

“Particularly for a Friday, seeing both those books over 600% subscribed, that’s really, really impressive,” he said. “I get the feeling that since last Thursday’s announcements from the ECB, no one now is concerned about any liquidity risk for the peripheral banks anymore and all the asset managers, treasuries, if they can find some juice in new issues, they are massively jumping in, and that is what we have seen today.

“The Nordea and UniCredit Bank Austria trades earlier were already very successful transactions, but on the two today from the different jurisdictions with attractive levels, it was crazy. How long it will last, I’m not sure.”

Banco BPI’s EUR500m no-grow five year issue was the first benchmark covered bond from the issuer since 2010 and the first from Portugal since October 2017.

It was launched this morning by leads Barclays, parent CaixaBank, LBBW, Natixis and UniCredit with IPTs of the mid-swaps plus 35bp area. Orders surpassed EUR1bn after around 40 minutes, according to an update from the leads, and after books topped EUR2.5bn and 130 accounts after an hour and 20 minutes, guidance was set at 25bp-30bp, WPIR. The final pricing was 25bp over and the book reached more than EUR3.5bn, pre-reconciliation, with over 170 accounts involved.

A lead syndicate banker said the final pricing was flat to fair value following the tightening from IPTs that had reflected a premium of some 10bp.

Leads Crédit Agricole, Mediobanca, Natixis and UniCredit went out with initial price thoughts of the mid-swaps plus 75bp area for the “expected EUR500m” eight year OBG from Crédit Agricole Italia (formerly known as Cariparma). With books above EUR3bn and comprising over 150 accounts, pre-reconciliation, after little more than an hour, final guidance was set at 65bp+/-2bp, WPIR, and the size range at EUR500m to maximum EUR750m. The deal was ultimately sized at EUR750m and priced at 63bp with books above EUR4.5bn, pre-reconciliation, and some 250 accounts participating.

A syndicate banker at one of the leads put fair value at 60bp to the low 60s, noting that the strength of demand had enabled the issuer to tighten more than 10bp to end up effectively pricing flat to fair value. The spread of 115bp through BTPs is the highest ever achieved by the issuer.

“We have not seen such a quality and granular order book in any new covered bond issues executed in recent history,” said the syndicate banker. “The issuer felt obliged to upsize the initial size to accommodate investors hungry for the paper and capitulating on price.

“The footprint of Crédit Agricole Italia combined with the Cariparma branding have delivered once again in primary,” he added. “The sponsorship of the Crédit Agricole group is certainly delivering additional traction here – investors love the core quality with an Italian spread.”

An update on the planned euro benchmark debut of Danish Ship Finance (Danmarks Skibskredit) was provided by its leads this morning, ahead of the conclusion of its roadshow next Tuesday and deal thereafter. The leads said that the average spread of non-domestic comparables is in the context of 25bp-30bp for the planned EUR500m three and a half year trade.