Mediobanca took advantage of favourable market conditions and positive Italian headlines today (Monday) to sell a more than twice-subscribed EUR750m long seven year OBG, the first in three months. UniCredit HVB is meanwhile set to launch a debut, three year dollar Pfandbrief.

The last Italian benchmark covered bond was a EUR750m eight year for Crédit Agricole Italia (formerly Cariparma) on 15 March, and there have only been a handful of OBGs all year. Mediobanca had not tapped the market since July 2018, when it sold a EUR500m six year issue at 70bp over mid-swaps.

“Mediobanca had not been for nearly a year,” said a lead syndicate banker, “so there is scarcity value there, and we have not seen a lot of OBGs since the beginning of the year and they have all gone extremely well.”

Leads BBVA, Crédit Agricole, Mediobanca, Natixis and UniCredit went out with initial price thoughts of the mid-swaps plus 65bp area for the 1 October 2026 issue and ultimately priced the transaction at 53bp over following revised guidance of the 55bp area, plus or minus 2bp, will price in range. The deal was sized at EUR750m on the back of a final order book of some EUR1.7bn.

“It worked extremely well,” said the lead banker. “We tightened a lot and got a good, diverse and granular order book, so a very solid transaction.”

Another lead banker noted that the trade had benefited from a 5bp-6bp tightening of Italian government bonds this morning.

“BTPs have performed quite nicely over the course of the last few weeks,” he said, “and especially since this morning on the rumours that Italy will not now face an EDP (excessive debt procedure). That meant the relative value of OBGs versus BTPs was not as bad as it could have been – even if it’s still some 110bp through BTPs.”

The lead banker said the overall spread and yield complex was another factor playing in favour of Italian covered bonds.

“OBGs are a lot wider than basically anything else in covered bond-land,” he said, “and we were offering 0.5% when everything else is offering not even zero – today you had a SEB senior preferred five year with a 0.05% coupon.

“So all of that is part of why this worked really well.”

The lead banker said the deal had a “very low to negligible” new issue premium.

UniCredit Bank AG (HVB) will launch its first US dollar benchmark covered bond shortly, after having announced the mandate today. BayernLB, Citi, Credit Suisse, TD, NatWest and UniCredit will lead the $500m (EUR440m) no-grow three year Reg S public sector Pfandbrief.

The last dollar Pfandbrief was a $600m three year for Deutsche Pfandbriefbank on 22 May, the day after Landesbank Baden-Württemberg (LBBW) built a record Reg S order book for the first green covered bond in US dollars, a $750m three year deal.