Caffil launched its second euro benchmark within a month today (Monday), a €750m 15 year that was more than twice subscribed and paid a negligible new issue premium, hitting the long end of the market ahead of the start of European Union issuance to fund its SURE programme.

After announcing the mandate this morning, Caisse Française de Financement Local (Caffil) leads ABN Amro, Barclays, Commerzbank, LBBW and Société Générale went out with guidance of the mid-swaps plus 11bp area for a euro benchmark-sized 15 year transaction. After around 55 minutes, books were reported as being over €750m, excluding joint lead manager interest, and after around an hour and 40 minutes, the guidance was revised to 8bp+/-1bp, WPIR, and the deal was sized at €750m, on the back of around €1.5bn of demand, including €148m JLM interest. It was ultimately priced at 7bp, on the back of over €1.6bn of demand, including €148m JLM interest at re-offer.

The new issue is Caffil’s fifth euro benchmark this year, with its fourth, a €1.5bn long seven year, having been launched four weeks ago, on 14 September at 4bp.

A syndicate banker away from the leads said the around twice-subscribed transaction was “very straightforward” and went as expected for the regular issuer.

He suggested Caffil had opted to launch the deal ahead of the EU’s upcoming SURE funding programme, which is set to start issuing soon with a focus on longer maturities that some market participants have said could put pressure on spreads across the SSA and covered bond space.

“It’s about a month since they did their last covered,” he said, “so coming back-to-back, I think the idea is to come before the EU, which is only one or two sessions away.”

Another banker away from the leads played down this suggestion, instead positing that Caffil may be getting in ahead of high maturities in 2021.

“They’ve just under €4bn next year, and €2bn in January alone,” he said, “so this might have been a consideration, but I don’t think the EU SURE programme will have any material impact on spreads.”

Potential widening was likely taken into consideration by the issuer, according to a lead banker, who nevertheless said it was certainly not the main driver in timing.

“It’s now known that they’ll have an average maturity of 15 years in their funding, which may have some impact on those issuers who look at the longer end of the curve,” he said.

However, it is in general and has remained an issuer’s market, he added.

“If you have something further to do this year, it makes total sense to take advantage of this window.”

Another lead banker said the secondary performance of the most recent 15 year transactions, in particular a €500m deal from NN Bank on 16 September, helped pave the way for today’s issue.

“That 15 year is trading inverted to the 10 year they issued in June this year,” he said, “so it was quite certain from the start of the project that we were going to land this at 7bp.”

According to the leads, the French issuer paid no new issue premium, with one putting its January 2035s at 6.7bp and its June 2038s at 7.1bp.

The deal yielded a marginally positive 0.027%, which the other lead banker said was particularly welcome for some investors.

“There are certain buyers which are unable to buy at negative territory,” he said. “Obviously 3bp of yield doesn’t float everyone’s boat, but it does help on the margin.”

Wüstenrot Bausparkasse is expected to launch a euro seven year sub-benchmark mortgage Pfandbrief tomorrow (Tuesday), after announcing its plans today, with Commerzbank, DZ, LBBW and UniCredit as leads.

The new issue will be the German issuer’s third sub-benchmark, following a €300m eight year debut in 2017 – the first Pfandbrief to be launched by a building society – and a €250m eight year in 2018.