The euro benchmark covered bond market had its busiest day of 2020 yet today (Tuesday), as five issuers launched transactions totaling €5bn, with the biggest trade of the year, for BPCE, generating the biggest order book of the year, as the heavy supply continued to be comfortably absorbed.

A syndicate banker said that a robust and constructive market backdrop, aided by relative equanimity in the geopolitical sphere, supported a series of strong trades.

“Bunds were a bit softer this morning and equities a touch weaker,” he said, “plus the US and Iran topic feels fairly contained, so generally, in light of these factors, everything went very well.”

Another banker said that despite much of the supply being around the same tenor, each deal performed well.

“Covered bonds continue to be in very good shape,” he added.

Another banker highlighted that no covered bond trade this year has failed to perform – yet.

“The time will undoubtedly come,” he said, “but at this point in time, it’s still very strong all round.”

Compared to January 2019, the market is yet to see issuance from either Norway or Sweden, noted another syndicate banker.

“After today’s deals, we’re standing in the context of around €19bn of issuance,” he said, “which I think is a good number, but there is certainly room for other names to come to the market.”

Helaba is expected to launch a dual-tranche, five and 10 year euro benchmark deal tomorrow, via Barclays, Commerzbank, Credit Agricole, Helaba, ING and NatWest. And Bawag PSK has teed up a €500m no-grow eight year, with Banca IMI, DekaBank, Deutsche, Erste and LBBW as leads. According to pre-announcement comparables circulated by the leads, Bawag PSK January 2027s and October 2029s were at plus 2.3bp and 4.4bp, respectively.

BPCE SFH generated the biggest order book of the year for a euro benchmark trade today, attracting some €4.3bn of demand to its €2.25bn dual-tranche transaction, which is the largest covered bond transaction of the year so far.

Leads Crédit Agricole, Commerzbank, DZ, Natixis, NatWest, Nordea, NordLB and Santander went out with guidance of the mid-swaps plus 9bp area for the French issuer’s long eight year tranche, and the 13bp area for its 15 year tranche. After around an hour, combined books were reported as being over €2bn, excluding JLM interest.

After around an hour and 20 minutes, guidance for the long eight year was revised to 6bp+/-1bp, WPIR, and the deal size range set at €1bn-€1.25bn, on the back of orders over €2.3bn, while guidance for the 15 year was revised to 10bp+/-1bp, WPIR, with the size range set at €750m-€1bn, on the back of over €1.8bn demand.

The long eight year was ultimately priced at 5bp and sized at €1.25bn, on the back of over €2.5bn of demand, while the 15 year was priced at 9bp and the size set at €1bn, on the back of over €1.8bn of demand.

A syndicate banker at one of the leads said the issuer was extremely pleased with the result, given that it would initially have settled for a lesser outcome.

“With both tranches working so well, and pricing movements meeting so little resistance,” he said, “I think it’s fair to say they achieved everything they were hoping for.”

UniCredit Bank Austria leads ABN Amro, Deutsche, DZ, RBI and UniCredit went out with guidance of the mid-swaps plus 10bp area for a €500m no-grow 10 year transaction, and after around an hour and 25 minutes, books were in excess of €850m, excluding JLM interest. After around two hours and 10 minutes, the guidance was revised to 7bp+/-1bp, WPIR, on the back of orders over €1bn, excluding JLM interest. The deal was ultimately priced at 6bp on the back of over €1.05bn of orders, excluding JLM interest.

A syndicate banker away from the leads said the deal’s relatively modest order book likely reflected the volume of supply out of Austria at the long end of the curve since New Year. Another noted that even though the order book was definitely at the lower end of recent trades, it was still just over twice-subscribed, assuredly achieving the issuer’s aims.

“Not everybody is chasing everything with the same speed and vigour as a few days ago,” he said.

The syndicate banker said that with rates backing up over the past few days, there was potentially a reduced impetus for investors to opt for longer-dated maturities, especially considering a number of strongly performing eight years trades on screens today.

“Some might say, why should I go for a 10 year if I can get a good eight year?” he said, “especially as, with swap rates at the moment, you can go quite comfortably into positive yield territory on an eight.”

He added that a strong take-up last week from bank treasuries on 12 year trades may have caused these accounts to not participate.

“Bawag, the next Austrian, has announced an eight year for tomorrow, and this is probably a clever move,” he said. “Not to say the long end doesn’t work – just maybe not for every issuer.”

However, a syndicate banker at one of the leads said UniCredit Bank Austria was a very strong transaction that entirely met the aspirations of the issuer.

“Yes, the process was slightly slower than the others – no irrational exuberance here – but that was not a problem,” he said.

Axa Bank Europe SCF leads BNP Paribas, Commerzbank, HSBC, ING and Natixis went out with guidance of the mid-swaps plus 12bp area for a €500m no-grow seven year transaction this morning, and after around an hour and 20 minutes, reported books over €1bn, excluding JLM interest. After around two hours and 10 minutes, the spread was set at 8bp+/-1bp, WPIR, on the back of orders over €1.6bn, excluding JLM interest. The deal was ultimately priced at 7bp on the back of over €1.9bn demand, excluding JLM interest, pre-reconciliation.

A syndicate banker at one of the leads said the trade performed in line with the best covered bonds of the year so far, pricing with 1bp of new issue premium based on its own curve, and with peak orders of around €2bn.

“It had a very decent quality order book,” he said, “and for a €500m no-grow, there’s nothing bad to be said about it.”

He added that it was soon trading 1bp tighter in the aftermarket, “perfectly in line” with the issuer’s curve.

Deutsche Pfandbriefbank AG (pbb) leads Commerzbank, Crédit Agricole, Danske, DekaBank and DZ went out with guidance of the mid-swaps plus 9bp area for an eight year euro benchmark-sized transaction. An initial update reported the guidance revised to 6bp+/-1bp, WPIR, and the deal size set at €750m, on the back of over €1.45bn orders, excluding JLM interest. It was ultimately priced at 5bp, on the back of orders over €1.6bn, excluding JLM interest, pre-reconciliation.

A syndicate banker at one of the leads said when compared to previous, more modest deals from the issuer, the deal represented an exceptional result, with over 70 investors involved, a more than twice-subscribed book, and a pricing move in line with strong names, of 4bp.

“It’s a term that we should not use lightly,” he said, “but this was a fantastic trade.”

He said the book was well diversified, with a strong take-up from not only domestic, but also international accounts. He saw fair value at plus 3bp, based on pbb’s curve and taking into account recent German supply.

OP Mortgage Bank leads Nomura, NordLB, OP and SG went out with guidance of the mid-swaps plus 8bp area for the long eight year Finnish euro benchmark. Guidance was revised to 4bp and the size set at €1bn on the back of over €2bn of demand, and the deal was ultimately priced at 3bp on the back of over €2.4bn of orders, including €25m JLM interest.

A syndicate banker at one of the leads said the issuer had excelled in the face of competing supply, tightening 5bp from start to finish and pricing at around flat to fair value, based on its November 2026 paper trading at plus 3bp.

“It was a great result,” he said.

A syndicate banker away from the leads said that as one of the strongest and tightest names on the market today, the trade was “very, very solid”, and that opening books at 8bp was particularly compelling, given fair value was generally put at 3bp.

“You could argue they could have started tighter,” he said, “but they knew it was going to be an extremely busy market and they wanted an eye-catching starting point.”

Another syndicate banker away from the deal said the transaction developed dynamically, as its leads were the first to report a book over €1bn.