Five benchmark covered bonds hit the market today (Wednesday), including Mediobanca with the first OBG in more than a year, while UniCredit HVB achieved a €2bn-plus book for a positive-yielding 15 year. DNB is set to issue the first green covered bond of the year tomorrow amid the surge in supply.

The Norwegian issuer is set to launch a 10 year transaction via BNP Paribas, DNB, ING, LBBW and Société Générale, after announcing its mandate today.

Today’s five benchmarks made it the busiest day in the primary market in almost a year and, coming after just two euro benchmarks so far in 2021, a syndicate banker said the sharp increase in volume was more than welcome.

“All more or less worked according to the same pattern,” he said, “which is around 4bp of new issue premium from the start, zero for the finish and that’s about it.

“It was probably a coincidence they all came at the same time,” he added, “as they probably could have stretched them over a week or so.”

The success of today’s covered bond trades could prompt others to consider issuance tomorrow, said another syndicate banker, with more supply rumoured on top of the confirmed mandate.

“I would be very surprised if DNB had the market completely to themselves,” he said, “simply because you’ve had five deals printed today pretty much negative concession or flat.”

Mediobanca launched the first Italian benchmark covered bond since Crédit Agricole Italia in early January 2020, while today’s OBG is also the first benchmark from the periphery since Santander sold a cédulas in February of last year. Mediobanca’s last benchmark was a €750m long seven year transaction in June 2019.

Without announcing the mandate in advance, leads Commerzbank, Intesa Sanpaolo, Mediobanca, Natixis and RBI went out this morning with guidance of the mid-swaps plus 17bp area for a 10 year euro benchmark-sized transaction. The deal was ultimately priced at 13bp and sized at €750m, on the back of over €1.35bn of demand.

The obbligazioni bancarie garantite (OBGs) are the first to have been printed with a negative yield, and the pricing is the tightest ever achieved for a 10 year OBG. The spread is also the tightest on an OBG in any maturity since UBI issued a €1.25bn long eight year deal at 10bp in January 2018, while the last Italian benchmark, CA Italia’s €500m eight year last January, was priced at 23bp.

A lead banker said the issuer debated whether to proceed with the transaction this morning given rising political uncertainty within the Italian government that has led to a spike in BTP yields this week, but ultimately decided to proceed.

“In the end, we thought the developments wouldn’t have any major impact on the trade,” he said, “and this proved to be correct.”

Another lead banker said going ahead now avoided the risk of the Italian situation deteriorating significantly.

The lead bankers said the lack of Italian issuance made calculating fair value more complicated, but put it at around 10bp-11bp over mid-swaps, citing Mediobanca 2029s at around 9bp.

“This means there’s only a couple of basis points of new issue concession,” said one, “so this is a very good result, especially given it printed with a negative yield.”

The other lead banker highlighted the premium of as much as 7bp that was on offer at initial guidance.

“It looked really juicy,” he said, “and this made it possible for us to tighten 4bp to a 13bp landing, which is 3bp of NIP and very respectable for a market reopener on the Italian side.”

The transaction has room to perform in the secondary market, he added.

UniCredit Bank AG (HVB) leads BayernLB, Crédit Agricole, DekaBank, Erste and UniCredit went out this morning with guidance of the mid-swaps 7bp area for a €500m no-grow 15 year Hypothekenpfandbrief after announcing the mandate yesterday (Tuesday). After an initial update reported books over €1bn, the deal was ultimately priced at 3bp on the back of €2.1bn of demand.

The book is the largest achieved across today’s five deals, which a lead banker said was unsurprising given higher German participation in German trades, on top of it being eligible for CBPP3 purchases.

“As a whole, every trade went remarkably well today,” he added.

He said UniCredit’s deal went very well, with a quick turnaround and a wide mix of accounts, varying from institutional investors to savings networks and private banks.

“A lot of people that historically gravitate to the five to 10 year maturities are now looking at 15 to 20 years,” he said.

The 15 year Pfandbrief was priced at a positive yield of 0.013%.

After announcing its mandate yesterday, Jyske Realkredit leads BNP Paribas, Danske, DekaBank and Swedbank went out this morning with guidance of the mid-swaps plus 10bp area for a long six year €500m no-grow transaction. An initial update reported books over €1.8bn, and the deal was ultimately priced at 6bp on the back of €1.7bn of orders, including €75m JLM interest and more than 80 accounts.

A lead banker said it was evident the trade was going to succeed prior to its launch, considering the extent to which the issuer engages with investors despite its relatively modest size.

“This meant we had very good traction and some solid IOIs already by yesterday afternoon,” he said.

“It’s a seven year and it has a bit of spread to other paper,” he added, “so in that respect it was the perfect trade.”

He said there was minimal price sensitivity in the book, with Jyske being an issuer that typically leaves something on the table for investors. He saw fair value at 7bp, implying minus 1bp of new issue premium.

“Given the demand, and had it been another issuer, you could’ve easily printed at 5bp,” he added. “But they consciously made the decision to do it at 6bp and leave investors with a potential upside for the future.”

Following investor calls starting last Wednesday (6 January) for Komerční Banka’s inaugural benchmark covered bond, leads Barclays, JP Morgan and parent Société Générale opened books this morning with guidance of the mid-swaps plus 18bp area. The new issue was ultimately priced at 12bp and sized at €500m.

Deutsche Pfandbriefbank (pbb) proceeded with the first US dollar benchmark in over three months after a mandate announcement yesterday. Leads Citi, Credit Suisse, Goldman Sachs and NatWest went out with guidance of the mid-swaps plus 26bp area for a three year dollar benchmark-sized issue. The deal was ultimately priced at 23bp and sized at $750m (€617m) on the back of some $1.25bn of demand good at re-offer.

A lead banker said it was a “solid” result, with the level of demand enabling pbb to achieve its largest dollar benchmark, and also hit the upper size range of its issues in any currency.

“It’s also one of the tightest dollar covered prints out there,” he added. “For example, LBBW printed a dollar at 24bp [corrected from 20bp] in 2018, so at 23bp, this is very tight.”