ASB has mandated the first euro benchmark from New Zealand since January 2019, a 10 year set for launch after premarketing today (Monday), while Berlin Hyp is set to launch its third benchmark of 2021 tomorrow, a 12 year that will be its longest dated mortgage Pfandbrief benchmark.

Barclays, BNP Paribas, Commonwealth Bank of Australia (CBA) and HSBC have the mandate for ASB Finance Limited, the issuer of CBA subsidiary ASB Bank. The mandate for a credit update today was announced this morning, with a 10 year euro benchmark set to follow, subject to market conditions.

The new issue will be the first euro benchmark from New Zealand since Westpac Securities NZ sold a €500m (NZ$835m) five year in January 2019, while ASB itself last tapped euros in September 2018, with a €500m seven year deal. Issuance from Australia – where most New Zealand issuers’ parents are based – has also been scarce, with the last euro benchmark a €500m five year from Bank of Queensland in May 2019.

A syndicate banker away from the leads said the diversification on offer from ASB will make it an interesting trade.

“In the old days, the rule of thumb for pricing New Zealand was 5bp above the Aussies,” he added. “But with the compression in rates and spreads, they have moved closer together.”

Berlin Hyp is expected to launch its 12 year mortgage Pfandbrief tomorrow (Tuesday), with Commerzbank, DekaBank, DZ, JP Morgan and UniCredit announced as leads today. The new issue will be the longest dated benchmark mortgage Pfandbrief Berlin Hyp has launched.

Already this year, Berlin Hyp has sold a €500m long six year green Pfandbrief on 16 March and a €500m 10 year Pfandbrief on 19 January. The January 2031s were quoted at minus 4.5bp, mid, among pre-announcement comparables circulated by the leads, with Berlin Hyp May 2029s also at minus 4.5bp and September 2030s at minus 5.5bp.

A lead syndicate banker put fair value at around minus 4bp to minus 3.5bp.

“It depends on what steepness you attribute to the curve,” he added, “but it’s not that pronounced.”

He said he does not anticipate the recent regularity of Berlin Hyp’s issuance posing any problems.

“Investors cannot get enough of covered bonds in general because as an asset class there is still so little,” he added. “We are catching up on a year-on-year basis, but that is because last year was poor from April onwards.”

Despite the past two weeks each having seen three euro benchmarks – totalling €2.5bn last week and €2.25bn before that – year-to-date supply of €32.25bn remains well down on €54.3bn in the same period of 2020, according to Joost Beaumont, senior fixed income strategist at ABN Amro.

“The lack of supply has been – and will continue to be – a strong supporting factor for new deals, which attract strong investor appetite, despite issuers paying hardly any new issue premium,” he said.

Aegon Bank is ready to make the switch from conditional pass-through (CPT) issuance to soft bullets, having on Friday published the base prospectus for a new €5bn programme, following plans reported in November. It follows NN Bank in making the switch from CPTs, while Achmea Bank is planning to move similarly.