Caffil launched the second euro benchmark of the year today (Monday), a €1.5bn long 10 year deal that attracted some €3.3bn of orders flat to fair value, demonstrating strong investor appetite for the asset class. KEB Hana, meanwhile, will debut with a five year social deal after marketing.

Caisse Française de Financement Local (Caffil) leads Barclays, Citi, Commerzbank, Société Générale and UniCredit went out with guidance of the mid-swaps plus 7bp area for a euro benchmark-sized March 2031 transaction this morning. The deal was ultimately priced at 3bp and sized at €1.5bn, on the back of around €3.3bn of demand from some 75 accounts.

The last euro benchmark at least as large as today’s was a €1.5bn deal from Norway’s DNB Boligkreditt on 1 October, and the size is at the top end of what Caffil has previously issued.

A syndicate banker away from the leads said the new issue represented a strong outcome for the market.

“After barely an hour, they had a book of €1.6bn,” he said, “which is not bad at all, and at least with duration you get some sort of spread, although we’re only talking a couple of basis points.”

Caffil’s new issue was priced around flat to fair value, according to bankers at and away from the leads, who cited its June 2030s at plus 3bp, and January 2031s and December 2031s both at 2bp over.

“Depending on how you look at this, it was flat to curve, slightly over or slightly through the curve,” said another banker away from the leads, “so not bad and really quite OK.”

He said the outcome is just the latest illustration of demand outweighing supply in the asset class, and that this month’s issuance is likely to be “a mere fraction” of January’s traditional average volume of new covered bonds.

“This makes it a fairly smooth ride for potentially every issuer who feels like going,” he said.

A lead banker said demand for the transaction exceeded his expectations.

“In terms of subscription, over twice subscribed is certainly good to see,” he said, “and I think the timing was good, coming early in the week, sort of pre-empting others, as I think we will see more come later.

“€3.3bn with 75 orders and no new issue premium – that’s pretty good.”

The new issue was priced at a yield of minus 0.188%.

A syndicate banker said he would not be surprised to see issuance beyond 10 years in the near future.

“These might come from the traditional issuers who have been targeting these tenors historically in January,” he added, “either this week or perhaps next week.”

The French issuer’s last euro benchmark was a €750m 15 year on 12 October.

KEB Hana Bank (Hana) announced a mandate for a five year euro benchmark-sized social covered bond today, with investor calls commencing Wednesday. The issuer established a $5bn global covered bond programme last month, putting it in line to become the third Korean issuer in the international market.

BNP Paribas, Citi, Crédit Agricole, JP Morgan and Société Générale have the mandate.

Czech issuer Komerční banka is also in the pipeline with an inaugural five year euro benchmark, having held investor calls last week. SG is global co-ordinator and bookrunner alongside Barclays and JP Morgan.