United Overseas Bank (UOB) is set to launch the longest dated Singaporean covered bond yet tomorrow (Tuesday), an eight year euro benchmark, while RLB Steiermark is expected with its longest dated benchmark, a €500m 20 year, despite conditions having deteriorated last week.

The mandate for UOB’s eight year euro benchmark was announced today (Monday), with BNP Paribas, HSBC, NordLB and UOB set to launch the new issue tomorrow, subject to market conditions.

Austria’s Raiffeisen-Landesbank Steiermark (RLB Steiermark) has meanwhile mandated Commerzbank, Crédit Agricole, DekaBank, LBBW and RBI for its €500m no-grow 20 year mortgage covered bond, with launch also expected tomorrow following an announcement today.

Although three euro benchmarks successfully hit the market last week and covered bond spreads were resilient, lead managers on this week’s planned trades noted how wider market conditions had weakened on the back of US inflation concerns, which hit equity markets and pushed yields higher.

“The markets seem to be a bit trickier,” said a banker at one of UOB’s leads, “but we are confident that we will have a successful trade. The first feedback has been encouraging.”

The eight year issue will be the longest dated covered bond from Singapore, whence seven years is the longest maturity that has previously been issued.

UOB’s issue will be the first euro benchmark from Singapore of 2021, with the last from the jurisdiction having been a €1bn (SGD1.6bn) seven year from UOB in November 2020, which was priced at 17bp over mid-swaps. That was the largest Singaporean euro benchmark covered bond and first from the jurisdiction in over two years.

RLB Steiermark’s 20 year issue will be the longest dated benchmark it has launched, with 15 years having been its previous longest euro benchmark maturity. Its last new issue was a €500m 15 year in May 2018.

According to pre-announcement comparables circulated by the leads, RLB Steiermark May 2033s were trading at mid-swaps flat, mid, the same level as RLB Oberoesterreich and RLB Noe-Wien January 2035s. Bawag PSK November 2035s and March 2041s – the latter a €500m deal issued at plus 4bp in March – were at minus 1bp and plus 2bp, respectively.

A syndicate banker at one of the Austrian bank’s leads put fair value at 2bp-3bp over, based on the recent Bawag PSK 20 year, and noting that the other comparables are relatively illiquid.

He said that although broad market sentiment had recovered somewhat at the end of last week, the bout of rates volatility could make long dated issuance more challenging.

“But as long as screens hold well and secondaries are in line with what we have seen last week, the transaction should work quite well,” he added.

A syndicate banker said that a Dutch issuer is also eyeing the long end of the curve for a possible transaction in the coming days.