NAB attracted over €1bn of orders to a €850m seven and a half year covered bond today (Monday) and could tighten pricing by 3bp, ahead of a new NGEU trade tomorrow, with Credem mandating the first OBG since March. CIBC is meanwhile due with the first dollar benchmark since February.

After a mandate announcement for a seven to eight year euro benchmark on Friday, National Australia Bank (NAB) leads BNP Paribas, Deutsche, HSBC and NAB this morning went out with initial guidance of the mid-swaps plus 13bp area for the January 2029 issue, with expected Aaa/AAA ratings (Moody’s/Fitch). After two hours, books were reported to be above €1bn, and after three hours, the spread was fixed at 10bp on the back of books above €1bn, excluding joint lead manager interest. The issue was ultimately sized at €850m (A$1.34bn), with final books above €1bn.

Syndicate bankers away from the leads deemed the outcome solid and in line with recent supply.

“It took its time, no doubt, but it’s just not the time for speedy transactions,” said a banker away from the leads. “This is not the most exciting of markets, and a solidly clearing transaction is definitely something that people appreciate.”

The new issue is the first benchmark covered bond from one of Australia’s big four since the onset of the Covid-19 pandemic, the last having been a £1bn five year Sonia-linked trade from NAB in January 2020, while the last Australian euro benchmark was a €500m five year conditional pass-through from Bank of Queensland in May 2019.

Another banker away from the leads said it was good to see non-European supply away from Canada.

“They had a very good book,” he added, “and despite the odd maturity of 7.5 years, it was a respectable trade.”

The other syndicate banker suggested the yield available on the 7.5 year maturity – plus 0.048% – had helped, and a lead banker said that had played into the choice of maturity, attracting investors seeking a positive yield but not wanting too long duration.

According to another lead banker, the coupon of 0.01% is the lowest achieved by an Australian major in any format and any currency.

The lead bankers put the new issue premium at 1bp-2bp, with bankers away from the leads seeing it a basis point or so wider.

The first lead banker said the issuer had taken advantage of a fairly quiet market ahead of the launch of a new Next Generation EU (NGEU) bond, which is set to take centre stage tomorrow.

A seven year Credito Emiliano (Credem) OBG was announced today and is set for launch in the near future. Barclays, BNP Paribas, Crédit Agricole, SG and UniCredit have the mandate.

It will be the first euro benchmark from Italy since a €500m 12 year green OBG from Crédit Agricole Italia on 8 March, only the third benchmark OBG of the year. Credem’s last benchmark OBG was a €750m five year issued in January 2019.

According to pre-announcement comparables circulated by the leads, Mediobanca November 2029s were quoted at 3bp, mid, Crédit Agricole Italia January 2028s and March 2029s at 4bp, and Intesa Sanpaolo October 2027s at 9bp and January 2030s at 11bp.

With signs of the summer break setting in earlier than expected, bankers said they do not expect much further supply this week, partly dependent on how the NGEU trade goes.

“We’re not exactly able to set this market on fire,” said one. “It’s not the environment for doing something opportunistic or just hammering out a trade for the sake of hammering out a trade. So, I believe there won’t be a lot happening.”

Canadian Imperial Bank of Commerce (CIBC) is meanwhile expected to hit the market tomorrow with the first Canadian US dollar benchmark since September, following a mandate announcement today. CIBC, Citi, Credit Suisse and HSBC have the mandate for the five year Reg S/144A issue.

Dollar covered bond issuance this year has been limited to two $750m (C$922m, €628m) Pfandbriefe, a three year from Deutsche Pfandbriefbank in January and a four year from Aareal in February. The last dollar deal before those was a $750m three year for Fédération des caisses Desjardins du Québec in September.

CIBC’s last benchmark covered bond was a £1.25bn five year Sonia-linked issue the week before last, on 16 June, and its last euro benchmark a €1bn eight year on 22 April.