DZ Hyp encountered a similarly moderated reception to Caffil yesterday when it attracted some €1.5bn orders to a €1bn eight year Pfandbrief flat to fair value today (Wednesday), while Axa Home Loan SFH found demand for a €500m 15 year limited to €740m. SR and HVB meanwhile joined the pipeline.

After announcing the mandate yesterday (Tuesday), DZ Hyp leads Commerzbank, Crédit Agricole, DZ, Helaba, HSBC and Lloyds went out with guidance of the mid-swaps plus 8bp area this morning for an eight year euro benchmark-sized transaction. After around an hour and 15 minutes, books were reported as being over €1bn, excluding JLM interest, and after around two hours and 15 minutes, the spread was set at 5bp, on the back of over €1.5bn orders, excluding JLM interest. The size was ultimately set €1bn on the back of over €1.4bn good at 5bp, excluding JLM interest.

A syndicate banker at one of the leads said it was a strong result for the issuer, with a high quality order book.

“We started at 8bp and brought it to 5bp, which is fair value,” he said, “and we still got a book together warranting a solid €1bn. In that respect, it’s definitely a success and we are all happy.”

A syndicate banker away from the leads, who also saw it flat to fair value, said it was a decent print.

“If you think a strong name needs to tighten 5bp or 6bp, you could consider it weaker,” he said, “but I think this is closer to the new normal now when it comes to spreads and book sizes. Less opportunistic buyers are not as frenetic as they have been, but the traditional covered bond investor base is still around.”

Axa Home Loan SFH leads Crédit Agricole, HSBC, Natixis and SG went out with guidance of the 18bp area for the €500m no-grow 15 year transaction. An initial update reported books as being over €650m, including €40m JLM interest, and the spread was ultimately set at 16bp on the back of over €740m of demand, including €40m JLM interest.

A syndicate banker away from the leads said a combination of factors may have led to weaker demand, including diminishing relative value versus govvies, an abundance of supply from Axa names already this year, and recent issuance at the long end of the curve.

Another said the €1.5bn of demand at re-offer for a Caffil €1bn 10 year transaction yesterday (Tuesday) set alarm bells ringing that investors are pushing back against tighter spreads and that issuers need to be more diligent in their pricing strategies.

“The market’s taking a bit of a breather,” he added, “as you can’t expect these deals to go tighter and tighter.”

SR-Boligkreditt announced its plans for a seven year euro benchmark-sized transaction this afternoon. Barclays, Citi, DZ, HSBC and LBBW have the mandate, for will launch in the near future, subject to market conditions.

It is set to be the third Norwegian euro benchmark this year, following a €500m 10 year transaction from SR on 17 February and a €500m no-grow seven year from Eika Boligkreditt on 6 March. According to pre-announcement comparables circulated by the leads, the 10 year was trading at 15.6bp, mid, while its October 2025s were at 10.7bp and green October 2026s at 10.2bp.

UniCredit HVB is planning a 10 year euro benchmark-sized Hypothekenpfandbrief. Helaba, Lloyds, LBBW, Santander and UniCredit have the mandate.

If both deals hit the market tomorrow (Thursday) or Friday, six euro benchmarks will have been issued during this week, making it the busiest since mid-January.