Erste sold the longest-dated negative-yielding euro benchmark today (Wednesday), a EUR500m mortgage Pfandbrief, which bankers said showed 10 years to be a potential sweet-spot, while Crédit Agricole and Deutsche Hypo tapped nine and three years on the market’s busiest day since mid-June.

After teeing up launch yesterday, Erste, HSBC, ING, LBBW and Nykredit opened books for Erste Group Bank’s 10 year EUR500m no-grow mortgage Pfandbrief this morning with initial guidance of the 10bp over mid-swaps area. Around 40 minutes later, they reported books above EUR1bn, excluding joint lead manager interest, and after around an hour and 15 minutes guidance was revised to 7bp+/-1bp, will price in range, on the back of books in excess of EUR1.5bn. The spread was ultimately set at 6bp over on the back of over EUR2bn of orders, with a yield of minus 0.16%.

“Ten years is definitely the tenor to go for at the moment,” said a syndicate banker away from the leads. “This is what I hear from the broader investor base – so this was the sort of trade we needed to get more confidence in the market.”

Along with today’s other deals, six negative-yielding new issues have now hit the market since 20 August, with Erste’s being the longest yet.

“It was a good, swift, clean execution,” said a syndicate banker at one of the leads, “and it leaves the market in a good place with some proven track record of negative yielding 10s working.

“It’s very positive for the issuer,” he added, “as well as for the market, given we have now seen threes, fours, fives, eights, nines and 10s, all accessed with reasonable success.”

Another syndicate banker said he was surprised that there has not been more 10 year supply ahead of ECBC industry events in Munich next week.

“We’ll definitely see more 10 years popping up quickly,” he added.

A syndicate banker at one of the leads put the new issue premium at around 3bp. He noted that January 2027 and 2028 Erste paper had been trading at around plus 1.5bp, mid, and May 2034s at around 2bp, but said these were squeezed and that fair value was around 3bp.

“They started at plus 10bp and ended with plus 6bp,” said another banker away from the leads, “so I think it went extremely well.”

Crédit Agricole Public Sector SCF today went one year shorter than Erste but one year longer than compatriot CFF on Monday, when the latter sold a EUR1bn eight year that was at the time the longest-dated negative-yielding issue.

After announcing the mandate yesterday, leads Crédit Agricole, Lloyds, Rabobank and UniCredit opened books for the EUR750m maximum nine year obligations foncières trade with initial guidance of the 13bp over mid-swaps area. Over two hours later, the size was set at EUR750m and the re-offer was set at 11bp+/-1bp over, on the back of orders exceeding EUR1bn. The spread was ultimately set at 10bp, with the yield minus 0.187%.

A syndicate banker away from the leads said the deal appeared successful, with the issuer tightening 3bp and hitting its maximum size, although another noted that it had been executed less swiftly than Erste, attributing this to less generous initial guidance.

According to comparables circulated by the leads, the French issuer’s August 2027 paper was quoted at plus 6bp, mid, and its March 2029s at plus 7bp, and a lead syndicate banker put fair value at plus 7bp.

“We didn’t start too wide because we were conscious of the sort of pick-up investors would naturally get from the SCF versus the mortgage covered bonds,” he said, “so we didn’t start at, say, 14bp or 15bp, which would have been more in line with what we saw on the other trades today.”

Crédit Agricole Home Loan SFH January 2029 paper, for example, was quoted at around 2.5bp over ahead of the new issue.

The lead banker added that fewer investors have lines available for public sector covered bonds.

He said that despite coming on a busy day in the market, the deal had gone well.

“This still did not prevent us from doing the trade at plus 10bp, with a 3bp new issue premium and at the size we wanted to do it,” he said. “We tightened by 2bp and eventually 3bp, while still retaining a good quality and having a book order over EUR1bn, so this was a really good achievement.”

Deutsche Hypothekenbank sold a EUR500m three year mortgage Pfandbrief today, yielding minus 0.531%, becoming the fifth German issuer to sell a negative-yielding benchmark in the past two and a half weeks.

The mandate for Deutsche Hypo’s deal was announced yesterday and leads ABN Amro, Commerzbank, DZ, NatWest and NordLB went out this morning with initial guidance of the mid-swaps plus 4bp area for the EUR500m no-grow deal. Around an hour and a half later they reported books above EUR500m, excluding joint lead manager interest, and after around two hours the guidance was revised to 3bp+/-1bp, will price in range, on the back of books above EUR650m. The spread was ultimately set at plus 2bp on the back of books in excess of EUR870m.

“In the end we tightened it to plus 2bp, with a very strong order book,” said a syndicate banker at one of the leads.

A syndicate banker away from the leads said that the deal performed well, given that the negative-yielding covered bond primary market is still relatively fresh territory.

“Initial guidance at plus 4bp was the kind of level where those investors who could buy were eager to participate, and with the book growing past EUR800m in the end, this was a pretty good result for the issuer,” he said.

According to pre-announcement comparables circulated by the leads, Berlin Hyp’s EUR1bn three year mortgage Pfandbrief that opened the negative-yielding season on 20 August was trading at minus 2bp, mid, and MünchenerHyp EUR500m four year from last week was also at minus 2bp. Deutsche Hypo paper was quoted at minus 4.5bp-4bp in the three year part of the curve.