Caffil launched its longest benchmark and the longest euro benchmark of 2021 today (Wednesday), a €500m 25 year deal as part of a dual-tranche trade that attracted €3bn-plus of orders, but a €500m 15 year Achmea debut soft bullet took off only after pricing was tightened just 1bp.

Caisse Française de Financement Local (Caffil) leads Crédit Agricole, Commerzbank, ING, Natixis and NordLB opened books this morning for the dual-tranche transaction with initial guidance of the mid-swaps plus 3bp area for a €750m no-grow October 2029 tranche, and plus 12bp-14bp, will price in range, for the €500m no-grow October 2046 issue. The eight year was ultimately priced at minus 1bp and the 25 year at plus 12bp, on the back of combined order books over €3bn.

The mandate for the French issue was announced yesterday (Tuesday) as a five year with a potential 20 to 25 year tranche, and the longer maturity was chosen as the second tranche, making it the longest benchmark Caffil has issued and the longest euro benchmark since Crédit Agricole Italia (formerly Cariparma) issued €750m January 2045 OBG in January 2020.

A syndicate banker at one of the leads said it was a “milestone transaction” for the issuer.

“The idea was to explore the feasibility of a 25 year tranche,” he said, “and its success makes it crystal clear that it’s still a viable maturity. We saw Cariparma there last year, but that was a different market and a different yield.”

The lead banker said that while the investor base typically shrinks further out along the curve, moving from 10 to 15 and 20 years, the fall is even more pronounced going as far out as 25 years. He noted that relative value complicates matters further – Caffil’s new issue was priced around 11bp through OATs, and just 3bp wider than a €1bn 25 year SDG housing issue for Nederlandse Waterschapsbank in the SSA sector today.

“That looks good for Caffil,” he added.

He said the eight year was more straightforward, but similarly successful, noting it had come 2bp inside where BPCE SFH priced a long seven year on 6 September. The pricing was also flat to Caffil’s outstandings, although the lead banker suggested the new issue premium was flat to negative, given that two of Caffil’s closest points on the curve are green and social bonds that might be expected to trade tighter.

“The fact it was just €750m obviously helped,” he added.

Caffil’s success came despite concerns expressed by some bankers yesterday over primary market conditions, but these were given some credence by the outcome of today’s other euro benchmark.

Following a mandate announcement yesterday, Achmea Bank leads Barclays, Deutsche, DZ, HSBC, ING and Rabobank opened books this morning with initial guidance of the mid-swaps plus 9bp area for the €500m no-grow September 2036 inaugural soft bullet. After about three hours, the spread was set at plus 8bp on the back of books above €625m. After the update, the book peaked to €1.1bn, according to a lead syndicate banker, ultimately leaving it more than twice subscribed.

“It was a bit slow, but when we fixed the spread, it went up significantly,” he said. “So in the end it was a nice book.”

Another lead banker said the experience was similar to that witnessed on some other recent covered bond issues.

“It went well,” she said. “We have a bit of a challenging market backdrop this week, especially for long dated covered bonds, and given the pipeline was a bit busy in covered and SSAs, but today was more stable and overall we felt that the market was in good enough shape to be able to take all these trades together, and the issuer didn’t want to take the risk of waiting, potentially for some additional volatility tomorrow post-FOMC and post-Asian overnight news.

“Given the busy market,” she added, “we knew we probably wouldn’t be able to tighten this too much and the issuer was quite focused on price and didn’t want to start too wide. If you look at where the major Dutch banks trade, setting Achmea’s new issue in this format only 2bp back of where a recent major Dutch name came is a very good result for them.”

ABN Amro priced a €1.5bn 20 year soft bullet at 6bp over mid-swaps on 10 September.

A syndicate banker away from the leads said he was surprised the trade had not worked better, but said the final outcome was a decent result. He saw the pricing 2bp back of a €500m 15 year soft bullet debut compatriot Aegon issued in June.

“Achmea is smaller and it makes sense for it not to tighten the last basis point on an inaugural trade,” he added.

Kommunalkredit Austria leads DZ, Erste, Helaba and RBI went out this morning with initial guidance of the mid-swaps plus 22bp area for a €250m September 2028 sub-benchmark. After initially reporting books above €500m, the leads after two hours set the spread at plus 15bp on the back of over €900m of demand, with the final book reaching €1.2bn, according to a lead syndicate banker.

“It went extremely well,” he said.

He noted that they were able to tighten pricing by 7bp in one step, with no accounts dropping when the spread was fixed.