A 20 year piece of a dual-tranche Crédit Agricole Italia OBG was priced in line with initial guidance today (Wednesday), as shorter paper – including the Italian’s 10 year as well as BPCE and HCOB issuance – outperformed. Two Norwegians are set to open Nordic supply tomorrow, alongside BayernLB.

Following a mandate announcement yesterday (Tuesday), Crédit Agricole Italia leads Crédit Agricole, IMI-Intesa Sanpaolo, Natixis, RBI, SEB and UniCredit opened books this morning with initial guidance of the mid-swaps plus 13bp area for a 10 year tranche with an expected €750m size, and the plus 20bp area for an expected €500m 20 year tranche, rated Aa3. They ultimately set the sizes at €1bn for the 10 year and €500m for the 20 year on the back of combined books above €2bn, excluding joint lead manager interest, skewed towards the shorter tranche, with the re-offer spreads fixed at 10bp for the 10s and 20bp for the 20s.

The 20 year OBG is the first of any tranches of this year’s euro benchmark supply not to have been tightened from initial guidance, with moves typically of 4bp-5bp from start to finish.

“Overall, it went pretty well,” said a lead syndicate banker. “We knew that the 20 year was going to be tough as it’s very long.

“But then in the end, we had a very solid book, even if not that much oversubscribed on the 20 year, and the pricing of 20bp is a very good achievement.”

He noted that a €750m 25 year tranche of a Crédit Agricole Italia dual-tranche transaction in January 2020 had been priced at 45bp.

The lead banker said secondaries implied fair value of around 5bp-6bp for the 10s and around 11bp-12bp for the 20s, with two other market participants seeing fair value for the shorter a touch tighter but the longer tranche in line with the lead’s calculation. However, he said secondary OBG levels are “very much squeezed”, with the ECB contributing to the situation, meaning that they are not useful references for investors.

“Therefore, I don’t think we have to consider a premium of 5bp-8bp,” he added, “because in reality, the fair value is at a higher level vis-à-vis the secondary market.”

A syndicate banker away from the leads said that particularly the 20 year tranche may have looked expensive to investors versus BTPs, further limiting appetite for the very long maturity.

He suggested that, coming after a €500m 20 year Caffil benchmark yesterday proved less straightforward than a €750m 10 year tranche, the Italian deal could demonstrate caution about the rates outlook among some accounts.

The lead banker downplayed suggestions that the upcoming Italian presidential election on 24 January contributed to any reticence on the part of investors.

BPCE SFH leads Crédit Agricole, DZ, JP Morgan, Natixis, Santander, Scotiabank, Swedbank and UniCredit opened books for the French deal this morning after a mandate announcement yesterday, with initial price thoughts of the mid-swaps plus 2bp area and plus 6bp area for five and 10 year benchmarks, respectively. Both tranches were ultimately sized at €1bn, with the five year fixed at minus 3bp on the back of a book of some €2.45bn, and the 10 year at plus 2bp with some €1.65bn of demand.

A lead banker said the outcome of the deal was in line with recent trends, with its moves of 5bp and 4bp for the shorter and longer tranches, respectively.

“It went well,” he said. “The shorter, the better – that’s the way it goes these days.”

Lead bankers put the fair value for the five year at minus 2bp, implying a negative NIP of 1bp, and at 1bp or 2bp for the 10 year, implying 0bp-1bp of NIP.

“Investors are looking and chasing deals that were impossible to get in the in the last 18 months,” said another lead banker, “a five year from a core name in positive yield territory. People who had to be invested into long bonds are now happily going back into shorter tenors.”

Following a mandate announcement yesterday (Tuesday), Hamburg Commercial Bank (HCOB) leads Crédit Agricole, Citi, Commerzbank, LBBW and UniCredit went out this morning with initial guidance of the mid-swaps plus 3bp area for the €500m no-grow January 2027 Hypothekenpfandbrief, rated Aa1. After an hour and 55 minutes, they reported books above €1bn, including €80m in JLM interest. After two hours and 40 minutes, guidance was revised to minus 1bp+/-1bp, will price in range, on the back of books above €1.1bn, JLM interest unchanged. The spread was ultimately set at minus 2bp, with the order book reported over €1bn, JLM interest unchanged, pre-reconciliation. The order book at allocation stood over €890m, including €50m JLM interest, good at re-offer.

According to pre-announcement comparables circulated by the leads, HCOB November 2028s were quoted at plus 1bp, mid, and a syndicate banker away from the leads saw the minus 2bp re-offer as inside fair value, reiterating the popularity of shorter dated issuance.

Bayerische Landesbank (BayernLB) is planning a €500m no-grow eight year public sector covered bond with ABN Amro, BayernLB, Crédit Agricole, DZ and Natixis as leads.

According to comparables circulated by leads, BayernLB February 2029s were quoted at minus 4bp, mid, their November 2029s at minus 5bp, and April 2031s at minus 4.5bp.

Norway’s SpareBank 1 Boligkreditt (SpaBol) and Sparebanken Vest Boligkreditt are set to provide the first Nordic euro benchmark supply of the year tomorrow, after having today mandated new issues. SpaBol has mandated BNP Paribas, Commerzbank, DZ and Swedbank for a six year, while its compatriot is planning a 10 year via Danske, Deutsche, HSBC, LBBW, Natixis, NordLB and UniCredit.

Sparebanken Vest’s 10 year euro benchmark will be its first in the maturity and longest dated covered bond in euros. Its longest dated outstanding, green June 2027s, were quoted at mid-swaps plus 0.5bp, according to comparables circulated by the leads, while SpaBol, SR Bank and Eika 2031 paper was all quoted at plus 2.5bp.

SpaBol August 2026s and September 2027s were quoted at minus 1bp, while its November 2028s and January 2029s were at plus 2bp.

SpaBol and Sparebanken Vest were the last Norwegian issuers to sell euro benchmarks in 2021, the former selling a €1bn seven year in late October, after the latter had earlier that month issued a €750m five year.