Caffil attracted over €3bn of demand to a €1.5bn long seven year deal flat to fair value today (Monday), and with UniCredit Bank Austria and SpaBol set to hit the market tomorrow – the latter in green – and another name said to be targeting Wednesday, this could be the busiest post-summer week.

After announcing the mandate this (Monday) morning, Caisse Française de Financement Local (Caffil) leads BNP Paribas, Crédit Agricole, Credit Suisse, HSBC and JP Morgan went out with guidance of the mid-swaps plus 9bp area for a February 2028 euro benchmark-sized covered bond. After an initial update reported books over €1bn, guidance was revised to 5bp+/-1bp, on the back of over €2.6bn of demand, including €125m joint lead manager interest.

The size was ultimately set at €1.5bn and the pricing at 4bp, on the back of over €3bn of demand, including €125m JLM interest, pre-reconciliation.

A syndicate banker away from the leads said it was an extremely strong result with a swift and convincing execution, indicating that plenty of lines were available for Caffil, even if it is the issuer’s fourth benchmark of 2020 – it issued a €750m 20 year in February, a €1bn five year Covid-19-related social Bond in April, and a €1bn 10 year in June.

“Some of the treasuries just want something that is better than minus 50bp,” he said, “and this is very clear in the case of this deal.”

He saw fair value at 4bp based on Caffil’s curve, as did another banker away from the leads, who praised the outcome.

“If you can do a €1.5bn long seven year at flat to fair value, why wouldn’t you?” he said.

A lead banker said the strong demand enabled Caffil to price the deal at the tight end of the range.

“Within 20 minutes we were at €1bn,” he said, “the momentum continued, and we were able to move the spread, ultimately pricing at flat to fair value.”

The order book was comprised of the typical array of investors, he said, with the Eurosystem placing its expected order.

“They needed some clarity on the deal size,” he said, “which was something that was not known in the beginning, so they needed some confidence before they were happy to participate.”

The new issue yielded minus 0.289%.

“There was no question it was going to be negative,” he added, “but we had the asset managers in, although this is no longer a new phenomenon. We had other official institutions participating from Asia and Europe, and given the marketing name of Caffil, this was no surprise.”

UniCredit Bank Austria (BACA) is set to launch a €500m no-grow 15 year Hypothekenpfandbrief tomorrow (Tuesday) after announcing its plans today.

The new issue will be the Austrian issuer’s second benchmark of the year, following a €500m no-grow 10 year in January. The last Austrian euro benchmark, a €500m no-grow seven year from Hypo Noe, was launched in May.

“It’s a 15 year so it will offer a bit of yield,” said a syndicate banker at one of the leads, “and it’s eligible for the ECB buying programme, so it’s going to be absolutely fine.”

A banker away from the leads said the undersupplied maturity would provide a slightly positive yield.

“It seems that everything works right now,” he said. “There’s not really any specific points on the curve that look better than others. If it has a covered bond label on it, it just flies out the door, as will this.”

Erste, Helaba, ING, SG and UniCredit have the mandate.

SpareBank 1 Boligkreditt (SpaBol) has announced plans for a seven year green euro benchmark-sized transaction. It is set to be the Norwegian issuer’s first euro benchmark of the year, with its last, a €1bn 10 year deal, having been launched in October 2019, although in May it sold a SEK7.5bn (€710m, NOK7.7bn) green covered bond.

A syndicate banker said it would be an interesting trade given there has been very little Nordic supply this year. Only two issuers from the region, OP Mortgage Bank and Sparebanken Vest Boligkreditt, have tapped the primary market this year, with a €1bn long eight year in January, and a €500m no-grow green seven year in July, respectively.

“Often on green you see a €500m no-grow size,” he said, “so I’m not sure if they’re hinting they could do more, but we will see tomorrow.”

Barclays, BNP Paribas, Swedbank and UniCredit have the mandate.

Another issuer is expected to launch a transaction on Wednesday, according to syndicate bankers.