RLB Vorarlberg attracted over €700m of orders to a €300m 15 year trade today (Wednesday), more than two weak Austrian benchmarks sold before yields backed up and CBPP3 restarted, while apoBank was more ambitious in pricing for a €500m 10 year than it might have been a week ago.

Raiffeisenlandesbank Vorarlberg leads Erste, LBBW, RBI and UniCredit went out this morning with guidance of the mid-swaps plus 14bp area for the Austrian issuer’s sub-benchmark. After around 50 minutes, books were reported as being over €400m, including €50m joint lead manager interest, and after around an hour and 40 minutes, guidance was revised to plus 11bp+/-1bp, will price in range, on the back of over €550m of demand, including €50m JLM interest. The spread was ultimately set at 10bp on the back of orders over €700m.

“It was a very nice trade,” said a syndicate banker at one the leads.

He said initial guidance was set sufficiently wide to attract investor interest and the momentum achieved then enabled the leads to tighten pricing 4bp on the back of the strong order book and ultimately achieve a new issue premium of 1bp. According to pre-announcement comparables circulated by the leads, the issuer’s September 2025 paper – its only benchmark, sold in 2018 – was trading at 5bp over mid-swaps, mid, and Erste May 2034 paper was trading at plus 2.5bp.

“Erste’s curve extension from five or six years to 15 years was approximately 4bp,” he said, “so if we adjust this by 1bp or 2bp, because it’s a sub-benchmark trade, we come to a pick-up of roughly 5bp to the RLB Vorarlberg’s September 2025.”

The sub-benchmark’s outcome is in contrast to the fate of the last two Austrian benchmarks: on 25 September Bawag PSK attracted only around €600m of orders to a €500m 10 year on 25 September, resulting in pricing in the middle of guidance, at 10bp over; and on 10 October a €500m seven year for Hypo Tirol was apparently not fully subscribed and also priced in the middle of guidance, at 14bp.

RLB’s 15 year today yielded 0.461%.

“We’re seeing these second and third tier names come to the market, which to me is an indication of every bit of strength being squeezed out of the market,” said a syndicate banker away from the leads. “Rates have gone up, which is a positive, the investor base is being more supportive, and of course CBPP3 has restarted.

“For anyone who can still go, it’s a free option to do whatever they want. I’d be surprised if this isn’t a window good enough for any issuer.”

The pipeline includes a range of idiosyncratic deals – such as a first renewable energy covered bond from NordLB Luxembourg Covered Bond Bank, a Deutsche Bank structured covered bond, and a second euro benchmark from Danish Ship Finance – as well as the first peripheral mandate in over a month, for Montepio.

Deutsche Apotheker- und Aerztebank eG (apoBank) became the third German issuer to enter the market since CBPP3’s restart last Wednesday, pricing a €500m no-grow 10 year mortgage Pfandbrief that attracted over €1.4bn of demand.

After announcing the mandate yesterday (Tuesday), leads Commerzbank, Dekabank, DZ, LBBW and UniCredit this morning went out with guidance of the mid-swaps plus 4bp area and around 40 minutes later reported books in excess of €1bn, excluding joint lead manager interest. After around an hour and a half, guidance was revised to plus 1bp+/-1bp, WPIR, on the back of orders over €1.25bn, excluding JLM interest. The spread was ultimately set at flat to mid-swaps on the back of over €1.4bn demand.

A syndicate banker at one of the leads said that they had first pitched the trade as starting with guidance of plus 5bp or 6bp, but, following the success of trades from Deutsche Kreditbank and BPCE SFH last Wednesday and new issue premiums falling towards almost zero, they decided on initial guidance to 4bp.

“The pricing was more aggressive, but we still landed at zero, so no new issue premium,” he said, “and the book was around three times subscribed at re-offer, which is great.

mBank Hipoteczny yesterday attracted €1bn of demand to a €300m no-grow long five year trade, its second euro covered bond. Leads Commerzbank, Erste, Helaba and LBBW priced the Polish sub-benchmark at 43bp over mid-swaps, tightening by a sizeable 12bp from initial guidance of the 55bp area.

“55bp was approximately 10bp back of fair value,” said a syndicate banker at one of the leads, “we moved the spread by 12bp, meaning a new issue premium of minus 2bp.”

He noted that the book size of over €1bn was in line with oversubscription levels of other trades this week.

“It was a great outcome for them,” he added.

Maureen Schuller, head of financials research at ING, said mBank’s success suggested the restart of net purchases under CBPP3 is not only proving helpful to eligible new issues, but due to spillover effects is equally supportive of transactions outside of the scope of the programme, such as non-Eurozone covered bonds and conditional pass-through maturity structures.

In sterling, Santander UK yesterday sold a £1bn (€1.16bn) five year Sonia-linked covered bond that attracted over £2.2bn of demand.

After announcing the mandate on Monday, leads NatWest, Santander, Standard Chartered and TD yesterday went out with guidance of the Sonia plus 65bp for the sterling benchmark-sized FRN. An initial update from the leads reported books over £1.25bn, and guidance was later revised to 62bp+/-2bp, WPIR, on the back of over £2.2bn demand, and the size was set at £1bn. It was ultimately priced at 60bp.

A syndicate banker away from the leads said the transaction had succeeded in attracting pent-up demand from investors, as it is the first UK Sonia-linked trade since the summer, and that it was further aided by a favourable UK risk market environment.

“It demonstrates that there is window for UK issuers now, pre-general election, to get stuff done,” he said, “and people seem to be more comfortable with UK risk in every part of the spectrum, from senior to Tier 2.”