Caffil kept supply ticking over with a €750m no-grow eight year social issue today (Monday) flat to 1bp through fair value on the back of a twice-oversubscribed book. Bausparkasse Schwäbisch Hall is set to launch its second benchmark tomorrow, while pbb has mandated the second sterling deal of 2021.

With today’s issue, SFIL group member Caisse Française de Financement Local (Caffil) becomes the first issuer of 2021 to have visited the euro benchmark market on three occasions, following a €1.5bn long 10 year in January and a €750m 15 year in February (BPCE SFH has issued four benchmarks via two dual-tranche issues).

Leads Barclays, BBVA, BNP Paribas, JP Morgan and SG opened books with initial guidance of the 2bp over mid-swaps area for the €750m no-grow eight year trade. They reported books above €1bn, including €170m joint lead manager interest, after an hour, and a little over an hour and three quarters moved directly to setting the final pricing, at minus 2bp, on the back of around €1.8bn, including JLM interest. The final order book at re-offer including JLM interest was around €1.5bn, with around 60 accounts involved.

A syndicate banker at one of the leads said they moved directly from the plus 2bp starting point to minus 2bp re-offer in one step given that the issuer and leads all accepted the minus 2bp level as the appropriate landing point and to avoid “teasing” investors.

The leads put fair value at around minus 1bp, implying the new issue came around 1bp inside fair value, although some bankers put fair value at minus 2bp, depending on exactly where they saw outstanding Caffil bonds. One banker suggested that while minus 1bp was fair value for conventional Caffil paper, fair value for a new social or green bond was minus 2bp.

Syndicate bankers away from the leads said the deal appeared to have gone well, following the trend of most trades in moving some 4bp from start to finish, and being comfortably oversubscribed, even if some accounts dropped out at the final pricing.

“In a covered bond market where supply is down 50%, this would have gone well anyway,” said one. “But the social element definitely helps.

“There are some accounts who are inactive in covered unless the bonds are in green or social format, and while they don’t put in orders for €50m, they help with a final aggressive pricing move.”

Bausparkasse Schwäbisch Hall (BSH) is expected to launch only its second benchmark covered bond tomorrow (Tuesday), following the announcement today of a €500m no-grow 12 year mortgage Pfandbrief via BayernLB, DZ, Natixis, Swedbank and UniCredit.

The German building society launched its debut in October 2020, a €500m 10 year issue. According to pre-announcement comparables circulated by the leads, that was this morning quoted at minus 1bp, mid, while DZ Hyp March 2030s and April 2029s were quoted at minus 3.5bp.

Deutsche Pfandbriefbank (pbb) has mandated only the second sterling benchmark of the year for launch in the near future, a three year Sonia-linked floating rate note, via Deutsche, HSBC, NatWest and Nomura.

The only previous benchmark sterling supply this year was a £1bn (€1.16bn) 10 year FRN from Nationwide Building Society in February. Pbb’s last sterling benchmark was a £500m three year FRN in September 2020.