SR-Boligkreditt kicked off September euro benchmark supply with a €500m seven year issue today (Wednesday) that bankers said achieved tight pricing, and Hypo Noe is expected with the same size and maturity tomorrow. HSBC Canada is meanwhile preparing a euro debut.

The Norwegian issuer mandated Barclays, Natixis, TD Securities and UniCredit for the seven year euro benchmark trade, and went out with initial guidance of the mid-swaps plus 7bp area. Following book updates of above €850m and €1bn, the size was eventually set at €500m and the spread fixed at 3bp.

Syndicate bankers away from the leads said the re-offer spread was roughly flat to fair value, with one suggesting the issuer had prioritised price over size [corrected from size over price].

“They knew it was a good market and started the project accordingly,” he said. “Going from 7bp to 3bp is quite normal for a €500m trade, and given they had a €1bn-plus book at one point I assume they could have done €750m at a wider level.”

He also noted that SR-Boligkreditt has already raised €1bn this year through a 10 year issue in March and been active in the domestic Norwegian krone market.

Another syndicate banker away from the leads said the 7bp starting point was in line with what he had recommended, but indicated that the 3bp outcome was 1bp inside what he had anticipated.

However, another banker said the pricing had contributed to a slow bookbuilding process.

“Plus 3bp definitely doesn’t leave anything on the table,” he added, “and maybe even takes a fraction away.”

The prior syndicate banker said the seven year maturity was a good choice, with covered bonds offering the best relative value in five to seven years, thanks to SSAs having performed well in that part of the curve.

“And particularly given where outright yields are,” he added, “and after we previously saw such a bias towards longer dated supply in covered bonds.”

Hypo Noe is expected to launch a €500m no-grow seven year mortgage Pfandbrief tomorrow (Thursday) via ABN Amro, BNP Paribas, Commerzbank, Helaba and UniCredit, following a mandate announcement today.

The Austrian is returning to the market less than three months after its last euro benchmark, a €500m 10 year priced at 5bp over mid-swaps on 16 June. Compatriot Bawag PSK on Tuesday of last week (24 August) issued a €500m no-grow eight year debut green covered bond flat to mid-swaps.

HSBC Bank Canada is set to launch its first euro benchmark covered bond next week, a five year, following a mandate announcement today and investor calls in the next two days. A syndicate banker at one of the leads said he expects the deal to be executed after Monday, 6 September, which is a public holiday in Canada.

“Five years were pretty good for the German players,” he added. “BHH and pbb both came with very low new issue concessions, which is why we think that there is a good opportunity for them to look at the market in this particular tenor.”

Berlin Hyp (BHH) opened the post-summer market on 17 August with a €500m five year, and Deutsche Pfandbriefbank (pbb) followed with the same size and maturity the next day, paying new issues premiums of 1bp to almost zero.

BBVA, BMO, CIBC, Danske, HSBC, IMI-Intesa Sanpaolo, LBBW, Natixis and RBC have the mandate for HSBC Canada’s new issue.

Its last benchmark was in the US dollar market in which it has previously been active, a US$1bn (C$1.26bn, €846m) three year in May 2020.

Canada’s Equitable Bank is also expected next week, with a three year sub-benchmark.