RBC launched the first euro benchmark of the week today (Tuesday), a €1.25bn seven year that offered a small pick-up for its size, while the pipeline refilled somewhat, with Argenta expected to issue a €500m 20 year tomorrow and ING-DiBa due shortly with an inaugural green Pfandbrief.

Royal Bank of Canada leads Commerzbank, Crédit Agricole, Danske, ING, Natixis and RBC announced the new issue this morning and opened books with initial guidance of the mid-swaps plus 10bp area for the October 2028 euro benchmark, expected rating triple-A. After around an hour, they reported order books over €1bn, excluding joint lead manager interest. After around two hours and 20 minutes, the spread was set at plus 6bp on the back of books of €1.6bn, including €85m in JLM interest. The size was ultimately set at €1.25bn (C$1.85bn).

A syndicate banker away from the leads said the deal looked “pretty good”.

“They started at plus 10bp and ended at plus 6bp, in line with fair value, or maybe 1bp of new issue premium,” he said. “As always for the Canadians, they take out of the market what they can, so €1.25bn for a book of around €1.5bn.”

A lead banker put fair value at 4.5bp-5bp, and said the issuer had leaned towards size over price.

“As you can imagine, the issuer was looking at a little bit more volume than a standard benchmark, if you will,” he said. “It was a very good deal, for sure.

“Interestingly,” he added, “with the recent pick-up in rates, it provided a positive yield – very, very little, but still positive – not that it made an enormous difference on the trade.”

The last Canadian euro benchmark in a busy month for covered bonds from the country was a €750m five year for National Bank of Canada priced at 3bp over mid-swaps last Thursday. RBC’s last benchmark was a $2.5bn five year on 7 September, which was the biggest single-tranche benchmark covered bond in over five years.

Argenta Spaarbank is expected with its second benchmark covered bond tomorrow (Wednesday), following an announcement today mandating Barclays, Belfius, LBBW and Natixis for a €500m no-grow 20 year. The Belgian issuer debuted in February with a €500m 10 year.

According to pre-announcement comparables circulated by the leads, that was quoted at 0.6bp through mid-swaps, mid. Recent de Volksbank and ABN Amro 20 year issues were quoted at plus 3.8bp and plus 4.5bp, respectively, with the curve from 10 to 20 years worth 4bp-6bp among Benelux names.

ING-DiBa AG is planning to issue an inaugural green seven year euro benchmark Hypothekenpfandbrief, and has mandated Commerzbank, Danske, Helaba, ING, LBBW and Natixis as lead managers. Launch is expected in the next couple of days.