Renewed demand for covered bonds post-ECB allowed DZ Hyp, NN Bank and – belatedly – Virgin Money to successfully execute euro benchmarks today (Tuesday), with Skipton Building Society and others set to follow, while SR-Boligkreditt will next week roadshow an inaugural green covered bond.

A syndicate banker at one of Virgin’s leads said that market conditions have been very positive on the back of the stimulus measures announced by the European Central Bank last Thursday.

“DZ Hyp’s and NN Bank’s deals also went very well today, so it is clear the ECB gave a lot of comfort,” he added. “Even if net purchases won’t restart until 1 November, the tone remains good.

“And now with the recent move on swap rates, we are not printing at such negative yields as we were previously.”

A syndicate banker on DZ Hyp’s deal meanwhile said that investors who had been resistant to negative yield levels before the ECB meeting were now “caving in”.

“They are accepting the inevitable for the time being,” he said, “meaning negative yields across the board, and in the meantime buying on a relative value basis.”

Among those tempted today by the improved prospects – which also led to a busy day in other asset classes – was Virgin Money, which had roadshowed from 27 August but then held off launching its first euro benchmark.

“Timing-wise it was a bit unfortunate because of the current turmoil surrounding Brexit,” said the lead banker. “We were also waiting for things to calm down after the ECBC and especially after the ECB, after which we saw the market grow more confident.”

A successful EUR750m 10 year from compatriot Lloyds yesterday (Monday), which was the first post-ECB euro benchmark, offered further encouragement, he added, and Virgin entered the market this morning without pre-announcing its deal yesterday.

Leads BNP Paribas, HSBC, Natixis, NordLB and UniCredit went out with guidance of the mid-swaps plus 35bp area for the seven year euro benchmark. Around an hour later, they reported books over EUR600m, excluding joint lead manager interest, and around an hour later the size was set EUR600m on the back of books over EUR1.1bn, including EUR50m JLM interest, with guidance revised to the 32bp area. The spread was ultimately fixed at 30bp on the back of orders over EUR1.35bn from some 50 accounts.

The lead banker said the most relevant comparable was a Coventry Building Society June 2026 issue at 23bp over, mid.

“It went quite well, given the busy market and considering that the context was quite difficult,” he added.

Virgin’s seven year offered a marginally positive yield, of 0.025%

Skipton Building Society made itself available for investor calls this afternoon ahead of an intermediate maturity euro benchmark and could make it three UK covered bonds in a row. Barclays, BNP Paribas, HSBC and UniCredit have the mandate.

Nationale-Nederlanden Bank launched its deal after a mandate announcement yesterday. Leads ABN Amro, BNP Paribas, DZ, HSBC and LBBW this morning went out with guidance of the mid-swaps plus 24bp area for the EUR500m no-grow 10 year Dutch conditional pass-through issue and about 50 minutes later reported books in excess of EUR500m, excluding JLM interest. After around an hour and 50 minutes, the guidance was revised to 21bp+/-1bp, will price in range, on the back of over EUR1bn of orders. The spread was ultimately set at 20bp, with EUR1.4bn of demand good at re-offer, comprising 66 accounts.

Pre-announcement comparables circulated by the leads put NN Bank’s September 2025s at 14bp over, mid, and September 2028s at 17bp over.

“Although the smaller of today’s trades, this was truly impressive in terms of oversubscription and spread dynamics,” said a syndicate banker at one of the leads.

“They moved from 24bp to 20bp, leaving only one basis point or so of new issue premium on the table. This trade shows this is a very receptive market, so absolutely no complaints.”

A syndicate banker away from the leads said he was particularly impressed by the size of the order book.

“EUR1.4bn of orders for a EUR500 no-grow – this is a very good outcome,” he said.

The deal offered a yield of 0.128%.

DZ Hyp also teed up its trade yesterday, before leads Commerzbank, Crédit Agricole, DekaBank, DZ, HSBC and NatWest this morning went out with guidance of the mid-swaps plus 3bp area for the January 2027 euro benchmark. After around and hour and a quarter the leads reported books over EUR1bn, excluding JLM interest, and after a little over two hours guidance was revised to mid-swaps flat plus or minus 1bp, will price in range, on the back of orders over EUR1.6bn, including EUR95m JLM interest. The size was ultimately set at EUR1bn, on the back of orders of EUR1.7bn, and the spread at minus 1bp.

According to pre-announcement comparables circulated by the leads, DZ Hyp’s March 2026 paper was quoted at minus 5bp, mid, and its April 2027s at minus 4bp.

“EUR1bn at minus 1bp was a tremendous result,” said a lead syndicate banker. “They not only reached the lower end of what we deemed possible in terms of price, but also the upper end of what they could take in volume, so this was quite an achievement.”

The mortgage Pfandbrief was priced at a yield of minus 0.263%.

SR-Boligkreditt is set to become the latest Norwegian green covered bond issuer, having mandated a roadshow for a debut transaction. The covered bond issuance will be off a green bond framework that also allows for unsecured issuance by parent SpareBank 1 SR-Bank, similar to a framework announced by Sparebanken Vest last month.

Barclays, ING (SR’s structuring advisor), Natixis, SEB and UniCredit have been mandated to arrange investor meetings running from Monday to Thursday of next week ahead of a euro benchmark.