UniCredit Bank Austria demonstrated the change in tone since the start of the year today (Wednesday) by pricing a EUR500m no-grow 10 year deal 3bp tighter than a seven year in January on the back of around four times more demand, after NIBC yesterday ensured a CPT success.

UniCredit Bank Austria (BACA) had on 9 January attracted around EUR650m of orders to a EUR500m seven year no-grow mortgage Pfandbrief that was priced at 18bp over mid-swaps – the middle of guidance. But today it drew almost EUR2.5bn of demand for its EUR500m no-grow 10 year, allowing for pricing at 15bp over mid-swaps.

Leads ABN Amro, Natixis, NordLB, RBI and UniCredit had gone out with initial guidance of the 19bp over mid-swaps area and around half an hour later reported books above EUR600m, excluding joint lead manager interest. After an hour the books were in excess of EUR1.4bn and guidance was revised to 16bp+/-1bp, WPIR, before the eventual pricing at 15bp on the back of almost EUR2.5bn of orders from some 130 accounts, according to a syndicate banker at one of the leads.

He said that, in line with recent issuance, the initial guidance had incorporated a premium of some 5bp over secondaries, with Bank Austria January 2026s at 9.5bp, mid, pre-announcement.

“Our base case was tightening 2bp-3bp, but the book surprised to the upside – maybe double my initial expectations – and tightening 4bp was the ideal,” said the lead banker.

“If you look at the previous deal, it struggled,” he added. “But there is such a difference in the market tone now, with the ECB postponing rate hikes.”

He noted that the three year tranche of a Sanofi multi-tranche bond today was priced with a negative yield.

“We are more or less where we were a year ago,” said the banker. “The ECB is not buying anymore, but otherwise it is the same game.”

However, he noted that the difference today is that – with CBPP3 over – absolute spreads in the covered bond market are higher.

“Hence the other difference: we are seeing a lot more accounts stepping in,” he added. “130 is a lot of investors compared to the 50 to 100 we might have seen a year ago.”

While positive about UniCredit Bank Austria’s trade, another banker put a more negative twist on the state of the market.

“What surprises me the most is that nothing has really changed in terms of macro risk since January,” he said. “That make it a bit scary to me.”

NIBC attracted EUR1.1bn of orders to a EUR500m no-grow eight year conditional pass-through (CPT) issue yesterday that offered a new issue premium of around 4bp.

A NN Bank EUR500m no-grow five year CPT on 20 February had offered reassurance that the structure was not overly suffering ill effects from renewed discrimination against the product by the ECB, after a lacklustre Achmea EUR500m no-grow seven year a week earlier had raised concerns.

Achmea was deemed to have adopted an overambitious approach and NIBC yesterday followed the example of NN Bank in offering more attractive initial guidance, even more so for the longer, eight year maturity.

Leads ABN Amro, Commerzbank, LBBW, NIBC and Rabobank went out with initial guidance of the 25bp over mid-swaps area and reported books above EUR500m, excluding joint lead manager interest, after around an hour. The spread was fixed at 21bp over on the back of over EUR1bn of orders after another hour.

Syndicate bankers at and away from the leads put the new issue premium at 4bp, higher than the flat to 1bp levels paid recently on typical non-CPTs. A lead syndicate banker said that, alongside the buoyant market conditions, the sensible pricing strategy was key to NIBC’s deal, like NN’s, doing better than Achmea’s. He noted that the NN’s earlier deal had also performed better than Achmea’s, tightening from 16bp to 13bp, mid, while Achmea’s – which attracted only around EUR590m of demand – had lagged a little, coming in from 18bp to 16bp.

“NIBC was sensible in not being too aggressive and being willing to offer a bit of spread on the table in return for a strong book,” he said. “It was a very strong trade.”

Fifty-seven accounts were allocated, with asset managers taking 50%, banks and private banks 33%, central banks and official institutions 11%, and insurance companies and pension funds 6%. Germany and Austria were allocated 51%, the Benelux 22%, the Nordics 11%, southern Europe 5%, France 4%, Switzerland 2%, the UK 2%, and other 3%.