Montepio attracted some €3bn of orders to a €500m five year CBPP3-ineligibe CPT deal today (Thursday), enabling “unusual” tightening of some 17bp, but a €500m 10 year Arkéa Public Sector SCF issue fell short of recent oversubscription levels, even if its outcome was ultimately solid.

Caixa Económica Montepio Geral’s first benchmark since 2017 is the first peripheral benchmark in over a month. It is also the first euro benchmark to be launched since the restart of CBPP3 net purchases on Wednesday of last week that is ineligible for Eurosystem buying, following CPTs’ exclusion since 1 January.

Leads Commerzbank, Natixis, NatWest and UniCredit went out this morning with initial guidance of mid-swaps plus 55bp/57bp for the €500m no-grow five year Portuguese trade. A first update reported books in excess of €1bn, guidance was tightened 12bp, and the deal was ultimately priced at 40bp over mid-swaps on the back of orders around €3bn.

“40bp over is way above anything else you are currently getting in this market,” said a syndicate banker away from the leads, “and if you have the lines for Portugal, go for it!”

He suggested the “unusual” pricing move reflected the “mad” state of the market.

Another banker away from the leads said the initial guidance was “pretty generous” given the pick-up it was offering against Portuguese government bonds and where comparables were trading.

“You have their 2022 in the context of the low 30s, and I saw the curve as being a couple of basis points at the most,” he said, “so I’d say fair value was mid to high 30s. At the end they’ve priced with a minimal new issue premium of probably a couple basis points, at most.

“Given they have a bond outstanding,” he added, “it seemed bizarre they started so much wider.”

Arkéa Public Sector SCF leads Crédit Agricole, Crédit Mutuel Arkéa, LBBW, Nykredit and Santander went out with guidance of the mid-swaps plus 8bp area for the €500m no-grow 10 year French trade. After around two and three-quarter hours, books were reported as being over €1bn, including €50m joint lead manager interest, and guidance was unchanged. Around 50 minutes later, the spread was set at plus 4bp, with the reported book size unchanged.

A syndicate banker away from the leads said the book size, the smallest for a euro benchmark in the past week, could be ascribed to either an overly ambitious pricing strategy, investor fatigue in the face of the new supply, or both.

“Maybe Arkéa got it a little wrong in terms of timing,” he said, “but it’s definitely the slowest moving trade this week.”

He said the guidance of 8bp was “a shade on the tight side”, putting fair value for the trade at around 3bp to 3.5bp, based on Crédit Mutuel Arkéa July 2029 and June 2033 paper trading at 3.5bp and 5.5bp, respectively.

“If you start at 8bp with this one, it leaves very little flesh on the bone,” he added.

Another syndicate banker away from the leads said trade appeared “uninspiring”, even if it was ultimately twice oversubscribed.

“The book was pretty small compared to what we’ve seen of late, “he said, “perhaps because it’s not the most loved name – they did do some investor marketing – or because its public sector.”

According to pre-announcement comparables circulated by the leads, a €750m 10 year Caffil green covered bond issued on Tuesday at 2bp over mid-swaps was this morning quoted flat to mid-swaps, mid, and a €1.25bn seven year BPCE SFH deal sold on Wednesday of last week at 5bp over was at 2bp.

Natixis Pfandbriefbank AG is planning to launch a €250m medium term mortgage Pfandbrief after investor meetings next Monday to Wednesday, subject to market conditions. BayernLB, DekaBank and Natixis have the mandate for the sub-benchmark.