Berlin Hyp is set to launch a €500m long six year Green Pfandbrief and Bawag a €500m 20 year covered bond tomorrow (Tuesday), after the ECB on Thursday announced a frontloading of PEPP purchases that bankers said could encourage investors back from the sidelines.

Following the latest meeting of its governing council, the European Central Bank announced that over the next quarter PEPP purchases will be conducted at a “significantly higher pace”, in a move analysts said should put a lid on the recent back-up in yields and keep volatility contained.

Syndicate bankers had cited uncertainty over the rates outlook as a potential factor in less oversubscribed order books experienced by the two euro benchmark covered bonds issued last week, with BPCE SFH pricing a €1.25bn 10 and 20 year issue on the back of €2bn-plus of orders and Crédit Agricole Italia a €500m 12 year green OBG on the back of €750m-plus of demand last Monday (8 March).

A syndicate banker on one of the deal’s expected tomorrow said the ECB’s move should have a positive impact on participation from European investors.

“The rates side seems to like it,” he said. “They gave a bit of guidance that they are here to support the market.”

He noted that as well as the imminent covered bond supply, SSA mandates were also announced in the wake of the ECB move.

“I’m hoping that there will be a little more activity on covereds, as well.”

Bawag PSK is expected to launch a €500m no-grow 20 year issue, after the announcement today (Monday) that BNP Paribas, Deutsche, DZ, Erste and NordLB have been mandated for the Austrian trade.

A lead syndicate banker put fair value at around 2bp over mid-swaps, citing Bawag PSK 2035s at around minus 1.5bp, but also the level of the most recent very long dated supply, with BPCE’s 20 year quoted at plus 3bp-3.5bp after having been issued at 4bp and a NN Bank 20 year at around 0.5bp after having been priced at 2bp on 23 February.

Berlin Hyp is due tomorrow with its latest green covered bond, a €500m no-grow January 2028 mortgage Pfandbrief, via Commerzbank, Crédit Agricole, LBBW, UBS and UniCredit.

A lead banker put fair value in the context of minus 3bp, with Berlin Hyp July 2027s at minus 4bp, according to comparables circulated by the leads, and its July 2028s and September 2030s at minus 3bp. Should the new issue come through mid-swaps, it will be the first euro benchmark to have done so since Berlin Hyp sold a €500m seen year at minus 1bp on 10 February 2020.

The new issue will be the shortest-dated euro benchmark since 19 January, when KEB Hana Bank sold a €500m five year social covered bond, and the lead banker said the different maturity should for bank treasuries and green investors prove an attractive alternative in the belly of the curve to the 10 years-plus supply that has accounted for as much as 70% of supply this year and had contributed to some “fatigue”.

He said the ECB has contributed to positive sentiment that today saw higher beta FIG trades go well, but that the outcome of tomorrow’s covered bonds was less dependent on the central bank’s stance.

“The Fed on Wednesday is the next hurdle,” he added.