KHFC and Caffil priced €1bn five and 10 year deals, respectively, today (Wednesday), with the Korean offering rare five year supply, while the French issuer’s outcome showed the change in conditions since the start of the year. Oberbank is expected tomorrow with a green sub-benchmark.

Korea Housing Finance Corporation (KHFC) entered the market after announcing the mandate for its five year Reg S/144A social covered bond last Thursday (17 June), with investor calls held ahead of launch today.

This morning, leads BNP Paribas, HSBC, ING, SG and Standard Chartered went out with initial guidance of the mid-swaps plus 21bp area for the euro benchmark-sized June 2026 issue, rated Aa2/AA/AA- by Moody’s, S&P and Fitch. After an hour and forty minutes, they reported books above €1bn, excluding JLM interest, and after around two and three quarter hours revised guidance to 19bp+/-1bp, will price in range, on the back of more than €1.2bn of demand. The spread was ultimately set at 18bp and the size at €1bn on the back of books above €1.3bn.

“We had a very high quality order book, so it was easy to print €1bn,” said a banker at one of the leads.

Quoting KHFC July 2025s at 15bp, bid, and putting the curve extension to June 2026 at around 1bp, he put the new issue premium at 2bp. He said the outcome was helped by the general lack of covered bond supply and in particular undersupply in the five year part of the curve – the last five year euro benchmark was a €500m trade for Fédération des caisses Desjardins du Québec on 30 March and only a handful of five year trades have hit the market this year.

“And obviously KHFC does pay a bit more than ECB-eligible issuance,” he added.

The issuer’s decision to announce the mandate several days in advance to allow time for investor work also contributed to the demand, according to the lead banker.

“We had really positive feedback,” he said.

Caisse Française de Financement Local (Caffil) leads BayernLB, BNP Paribas, Citi, SG and UniCredit announced the French trade this morning and went out with guidance of the mid-swaps plus 6bp area for the euro benchmark-sized June 2031 public sector obligations foncières, rated Aaa/AA+/AAA by Moody’s, S&P and DBRS. After around two hours, they reported books above €1.35bn, including €150m joint lead manager interest, then 20 minutes later fixed the spread at 4bp and the size at €1bn on the back of orders above €1.4bn, including €150m JLM interest. The final order book was above €1.2bn, including unchanged JLM interest.

“The 2bp move and sizing it at €1bn versus the €1.4bn book seemed prudent,” said a syndicate banker away from the leads. “It looked like a bit of an uphill struggle, but a solid result in the end.”

According to pre-announcement comparables circulated by the leads, Caffil March 2031s were trading at 1.9bp, mid, and its December 2031s at 1.6bp. The €1.5bn March 2031s issue was launched in January at 3bp, flat to fair value, on the back of some €3.3bn of orders.

Oberbank is set to launch the first Austrian green covered bond tomorrow, subject to market conditions, a €250m deal announced last Thursday as a seven to 10 year trade. Investor calls finished yesterday and, according to an update this morning, investors were leaning towards the 10 year maturity.