Axa Bank Europe SCF sold the first CBPP3-eligible benchmark in over two weeks today (Thursday), as BMO and TD also hit a market primed by the PEPP announcement yesterday, but its €500m four and a half year drew an underwhelming response in spite of the new pricing levels on offer.

Axa leads BBVA, BNP Paribas, Crédit Agricole, HSBC, LBBW and SG went out with guidance of the mid-swaps plus 35bp-40bp area for a four and a half year euro benchmark-sized transaction. Around an hour and a half later, books were reported as being over €600m, excluding JLM interest, and after around two hours and 15 minutes later, the spread was set at 38bp on the back of over €700m orders, excluding JLM interest. The deal was ultimately sized at €500m.

A syndicate banker away from the leads said the issuer had struggled to get the deal over the finish line despite it being the only CBPP3-elligible issue today, noting that he understood the Eurosystem to have placed an order for 40% – equivalent to €200m of the deal – even if there has been speculation about bigger tickets under the ECB’s new measures.

The last CBPP3-eligible deals were just over two weeks ago, for Commerzbank and Luminor on 3 and 4 March, respectively.

Another syndicate banker away from the leads said that given there has been little core Eurozone issuance in the past few weeks and the issuer is not a national champion, some investors may have shied away the trade.

“It’s not the most frequent of names and they don’t have many liquid points in the market,” he said, “so perhaps some would have appreciated a more solid first-mover from Europe – the timing was maybe a few days too early for them.”

However, he said that considering the circumstances, it was not an entirely bad outcome for the issuer.

“They usually don’t print more than €500m to €750m, and they got it done within the range, one has to be a little less critical at the moment.”

A syndicate banker at one of the leads said the issuer had hoped for a more substantial book size, and that investors possibly still need more time to process the ECB’s new message and measures.

The pricing at 38bp over mid-swaps is some 30bp wider than an indicative level of 8bp over, mid, for an Axa April 2025 issue that was circulated by the leads, although market participants have noted that screen prices are not reflecting where trades are occurring. The last French benchmark, a €1bn short 12 year for Crédit Agricole Home Loan SFH on 20 February, was priced at 7bp over mid-swaps.

Canadian issuers continued to prove the most active amid the volatility, with Toronto-Dominion Bank and Bank of Montreal approaching the market after Bank of Nova Scotia and Royal Bank of Canada sold the last two euro benchmarks before today, on Wednesday of last week (11 March) and this Tuesday, respectively, the latter with a €1bn five year at 40bp over mid-swaps.

Bank of Montreal (BMO) leads BNP Paribas, Barclays, BMO and Deutsche went out with guidance of mid-swaps plus 45bp, the number, for a three year euro benchmark-sized transaction. After reporting books in excess of €500m, and then later €1bn, they ultimately sized the deal at €1.25bn on the back of over €1.4bn of demand.

A syndicate banker at one of the leads said it decided to proceed with the issuance following the ECB’s announcement yesterday (Wednesday) evening, and that given the volatility seen in the past few weeks, the outcome was more than satisfactory.

“We were able to upsize the deal size to €1.25bn on the back of a €1.4bn book,” she said, “so we were very pleased.”

She said the spread was set when books were opened in order to de-risk the transaction as much as possible, and then offer full transparency by providing regular book updates.

“We’re in a very different environment at the moment,” she said. “So we wanted investors to come in and know what they were buying. This was also what TD did today as well as a deal in the SSA space.”

She said the issuer opted for a three year maturity in order to differentiate it from recent Canadian five year issuance, and highlighted that other issuers were also tapping the short end of the curve.

“With the exception of perhaps Axa,” she said, “going for a more defensive maturity length rather than say, seven or 10 years, turned out to be the right strategy.

“It also fitted nicely into the issuer’s maturity profile.”

TD leads Crédit Agricole, LBBW, NatWest, Santander and TD went out with guidance of mid-swaps plus 50bp, the number, for its four year euro benchmark-sized transaction. After around an hour and a half, books were reported as being over €750m, and then later, over €1.1bn. They ultimately sized the deal at €1bn on the back of around €1.2bn of demand.

A lead banker said the deal was an “amazing outcome” in the current environment.

The Canadian issuer postponed a planned three year sterling FRN on Tuesday after having started bookbuilding, citing intra-day volatility, and the lead banker said the market held up better today, with yesterday’s ECB announcements helping, and ultimately luck playing a part in the outcome of the euro benchmark.

A syndicate banker said that the fleetingness of market windows means that further supply could follow imminently.

“I wouldn’t be surprised if there were things coming tomorrow (Friday),” he said, “and I guess those thinking of doing something would do it sooner rather than later. This whole ‘don’t do things on a Friday’ probably no longer applies – who cares if it’s Tuesday, Friday or a Monday?”