Deals from Caffil and VUB today (Tuesday) are set to be followed by trades from Axa Home Loans SFH and DZ Hyp, making for the busiest week in euro benchmarks since before Covid-19 struck, although bankers said a moderation in demand was evident in Caffil’s €1bn 10 year as spreads return to pre-crisis levels.

Caisse Française de Financement Local (Caffil) attracted a peak €1.9bn of orders to its €1bn benchmark, falling to €1.5bn at its 7bp re-offer.

A syndicate banker away from the leads noted that the last 10 year euro benchmarks, a €1bn Arkéa Home Loans SFH deal on 26 May and a green BPCE SFH issue on 19 May, attracted over €3.8bn and €6.4bn of orders, respectively, at spreads of 15bp and 17bp. Caffil’s last euro benchmark, a €1bn five year Covid-19-related social bond on 7 May, attracted around €4.5bn demand.

“As we see ever tighter levels, it feels like we are seeing more resistance,” said the banker. “A lot of accounts dropped on the final revision, so this is definitely a deviation from what we’ve seen for the past few weeks or more.”

Another syndicate banker away from the leads said the result – a well oversubscribed deal paying no new issue premium – merely marked a return to pre-crisis outcomes.

“This doesn’t mean this crisis is over yet,” he added. “Some would argue it hasn’t even begun, but anyway, the way this market is acting is very much in early March terms.”

After announcing Caffil’s mandate yesterday (Monday) afternoon, leads Citi, Commerzbank, Natixis, SG and UniCredit went out with guidance of the mid-swaps plus 11bp area for the 10 year euro benchmark-sized transaction. After an initial update reported books over €1bn, guidance was later tightened by 3bp, on the back of over €1.9bn of demand. It was ultimately priced at 7bp on the back of over €1.5bn of demand.

The 7bp spread represented pricing around flat to fair value, according to syndicate bankers away from the leads, who saw the deal as a success, in spite of the moderation in demand.

One said that pricing 1bp inside OATs may have led some investors to shy away from the transaction, as reflected in the €400m drop in orders upon the final pricing revision.

Slovakia’s Všeobecná úverová banka (VUB) entered the market this morning after a mandate announcement yesterday morning, with leads Banca IMI, Commerzbank, Danske, Erste and LBBW going out with guidance of the mid-swaps plus 35bp area for the €500m no-grow five year transaction. After around an hour, books were reported as being over €1bn, excluding JLM interest, and after around two hours, guidance was revised to 30bp+/-2bp, WPIR, on the back of over €1.6bn of demand, excluding JLM interest. It was ultimately priced at 28bp on the back of over €1.4bn orders, excluding JLM interest, pre-reconciliation.

A syndicate banker away from the leads said the order book was encouraging for the jurisdiction, and that it printed with a small negative new issue premium.

“If you are showing some spread, even an upcoming country like this is getting great support,” he said. “This shows that the combination of QE and hardly any new issuance is wind in the sails of the asset class, making the market very reliable for getting funding if needed.”

According to pre-announcement comparables circulated by the leads yesterday, VUB’s March 2024s and June 2029s were at 29bp and 38bp, respectively.

A syndicate banker at one of the leads said it had succeeded in reaching the spread target of the issuer in the high 20s context.

“Landing at 28bp is maybe even a basis point better than expected,” he added. “The transaction went smoothly, at the peak having about €1.7bn in the order book, and most of the accounts stayed with us.”

Axa Home Loan SFH announced plans for a €500m no-grow 15 year transaction today, with Crédit Agricole, HSBC, Natixis and SG as leads. DZ Hyp is meanwhile preparing an eight year euro benchmark-sized transaction via Commerzbank, Crédit Agricole, DZ, Helaba, HSBC and Lloyds. The two deals were announced for launch in the near future.