Bawag PSK and Deutsche both went out with €500m no-grow 10 year benchmarks with 10bp area guidance today, but while the German tightened 3bp on a €1bn-plus book, the Austrian’s €600m book left it at 10bp, with ambitious pricing and a “buyer’s strike” cited as possible causes.

A first book update from Bawag leads Barclays, Erste, HSBC, LBBW and UniCredit put orders in excess of EUR525m, including EUR100m joint lead manager interest, and the deal was ultimately priced in the middle of the original guidance, at 10bp over – a yield of minus 0.112%, equivalent to 49.8bp over Bunds – on the back of orders around EUR600m, including EUR100m JLM interest.

The 10bp initial guidance was the same that Deutsche, Banca IMI, Rabobank, Swedbank and UniCredit went out with for Deutsche Bank’s size of the same size and maturity, but the German was able to revise guidance to 8bp+/-1bp, will price in range, on the back of books above EUR500m, and ultimately set pricing at 7bp on the back of orders above EUR900m, with the final book exceeding EUR1bn.

Bawag’s EUR600m order book is one of the weakest of the year.

“Two 10 year trades out there out there with similar metrics? This had a bit of an impact,” said a syndicate banker at one of its leads.

A syndicate banker away from the leads said that in the head-to-head competition, the Austrian Pfandbrief was inevitably going to fare worse than the German.

“It was a little unfortunate for them,” he added.

Bankers away from the leads said Bawag had been too ambitious in its pricing. Even though compatriot Erste three weeks ago priced a EUR500m no-grow 10 year at plus 6bp following initial guidance of the 10bp area, they said Bawag should have started a couple of basis points wider.

“Erste has performed and is trading at around plus 4bp, so I’d say fair value is more towards 6bp,” said one. “Their secondaries are super-tight as their levels are fairly squeezed, so maybe you could say fair value was lower, but I still think the starting level was a little too punchy.”

The lead syndicate banker suggested the market had not yet found an equilibrium on negative-yielding pricing, arguing that other order books in the past week had also proven lacklustre.

“We all need to think about what to take away from this result,” he said. “What’s clear is that the technical aspect of taking secondary curves and adding new issue premiums to sell to investors is not holding. And I can’t see that going longer to say, 15 years, will be any better.

“I think it was a bit of a buyer’s strike,” he added, “because not only the book size, but the number of participants was very skinny – 30 to 40 is nothing – so you can’t even call it a diversified book.”

Another syndicate banker away from the leads agreed that oversubscription levels had been on a downward trend and suggested that a “wobbly market” had not helped. He said recent oversupply of 10 year issuance could also have been a factor.

Yesterday Hypo Noe and Prima banka Slovensko each sold EUR500m no-grow seven years with modestly oversubscribed books of above EUR830m and EUR700m, respectively. On Monday, Belfius Bank sold a EUR500m no-grow 10 year at plus 10bp and in September alone, there have been a total of nine 2029 benchmarks.

The lead banker said that issuing a day after fellow Austrian Hypo Noe might also have played a factor in Bawag’s misfortune.

“If Bawag moved first, we perhaps could have been the winner and them the loser,” he said, “but it is what it is.”

Deutsche’s leads were meanwhile pleased with the outcome of the day’s other EUR500m no-grow 10 year.

“It went fairly smoothly considering the market backdrop has been weaker recently,” said a syndicate banker at one the leads.

He saw fair value around 4bp-5bp, citing Deutsche’s outstanding August 2028 paper at around plus 3bp.

“We started at the plus 10bp area, 5bp to 6bp back of fair value, and within an hour had books over EUR500m,” he said. “Once we reached EUR900m we revised the guidance to 8bp+/-1bp, WPIR, and just a few minutes later we were over EUR1bn and set the spread at plus 7bp – so 2bp-3bp of new issue concession.”

The deal’s yield was minus 0.147%.

Bank were allocated 50%, central banks 12%, fund managers 35%, and pension funds 3%. Germany and Austria took 79%, Norway 8%, Denmark 4%, Korea 3%, the Benelux 2%, and others 4%.