A social benchmark from DKB expected on Wednesday could offer the first clues to Eurosystem participation in new issues under restarted CBPP3, after the ECB said purchases that settle from 1 November will be possible. SMBC is meanwhile launching a euro and dollar benchmark.

Market participants had suggested the Eurosystem might buy in the primary and secondary markets ahead of the announced 1 November asset purchase programme (APP) restart date, and the European Central Bank has now confirmed that trades settling from 1 November onwards will be possible “allowing for trading as of 30 October [Wednesday]”.

Deutsche Kreditbank (DKB) completed a roadshow for its €500m no-grow 10 year “blue” social public sector Pfandbrief on Friday and, according to an official mandate update today (Monday), the deal is expected to be launched as early as Wednesday.

Syndicate bankers said that although DKB and its leads could be ready for launch tomorrow (Tuesday), given that market conditions are in a “stable mood”, in the words of one, books would likely open for the social Pfandbrief on Wednesday in order to gain Eurosystem participation.

“Like all market participants, we don’t know how much the ECB will play with, or if they really will play on the first day or not,” said a syndicate banker at one of the leads, “but given what they have done for the last three CBPP starts, it’s more or less certain that they will play.

“It will be interesting to see what size they take and how they act.”

According to pre-announcement comparables circulated by the leads, the issuer’s June 2024 and March 2027 paper was trading at minus 3bp and minus 1bp, respectively, and its October 2028 social paper was at plus 1bp. DKB parent BayernLB’s February 2029 paper was quoted at minus 2bp and DZ Hyp’s June 2029 and Berlin Hyp May 2029 paper was quoted at minus 3bp.

DKB’s leads are ABN Amro, BayernLB, DZ, Natixis and UniCredit.

The ECB has also announced that APP purchases will be temporarily suspended from 19 December to 31 December, in anticipation of “significantly lower market liquidity towards the end of the year and in order to reduce possible market distortions”.

Sumitomo Mitsui Banking Corporation (SMBC) today went out with initial price thoughts for a three year US dollar Reg S benchmark covered bond that is being launched in conjunction with a 10 year euro benchmark (that would not be CBPP3-eligible) that is expected tomorrow. Goldman Sachs, SMBC Nikko, Barclays, BNP Paribas, HSBC, and UBS set IPTs at mid-swaps plus the high 30s for the Japanese deal.

SMBC debuted in dollars in June, with a $1bn five year trade. According to a syndicate banker at one of its leads, that June 2024 issue was quoted at 41bp ahead of the new issue’s announcement, while recent three year dollar issuance from RBC was trading at 23bp, CBA at 27bp and HSBC Canada at 29bp. In euros, SMBC’s November 2023s were quoted at 18bp and June 2026s at 24bp, while non-Eurozone 10 year paper from the likes of TD, NAB, CBA and Westpac was seen in the mid-teens over mid-swaps.

Arkéa Public Sector SCF is planning to launch only its second benchmark covered bond after investor calls and meetings starting on Monday. The plans for a €500m 10 year no-grow covered bond via Crédit Agricole, Crédit Mutuel Arkéa, LBBW, Nykredit and Santander were announced today.

Although Crédit Mutuel Arkea Home Loans SFH is a regular issuer of euro benchmarks, Arkéa Public Sector SCF’s only previous benchmark was a €750m 10 year issue in September 2011.

An inaugural Caffil green bond is expected to be launched in “early November”, according to a post-roadshow update today. Meanwhile, NordLB Luxembourg Covered Bond Bank will conclude a roadshow for the first covered bond backed by renewables on Wednesday.

Public holidays in large parts of Europe on Friday are likely to lead to reduced activity towards the end of the week, according to syndicate bankers.