Euro supply hit its highest level in a month this week, as a Berlin Hyp €500m seven year today (Thursday) took supply to €5.5bn and with ING-DiBa set to hit the market tomorrow, reflecting an eagerness to issue while possible. LBBW has meanwhile sold the second green dollar benchmark.

After BPCE SFH and DZ Hyp on Tuesday issued €1.75bn seven and €1bn long seven issues, respectively, Commonwealth Bank of Australia (CBA) and UniCredit Bank (HVB) sold €1.25bn six and €1bn five year trades yesterday (Wednesday), while the unsecured FIG market reopened with the first supply since Thursday of last week (10 February). The euro covered bond volumes are the highest since the week-ending 21 January, before macroeconomic and geopolitical fears peaked.

Syndicate bankers said the increase in activity was more a question of issuers and investors coming to terms with the new situation and being keen to push on, than any fundamental change in the outlook.

“There is still a heightened sense of uncertainty,” said one. “Yes, there was a bit of relief in that Russia has not invaded Ukraine, but underlying inflation remains and the long end in particular remains under pressure.

“It’s then all down to price and whether issuers pay what is needed to get the deals done.”

Indeed, Rabobank head of credit strategy and regulation Matt Cairns said issuers are making hay while the sun shines.

“We may see more trades announced and priced intra-day,” they suggested, “a strategy which affords issuers the ‘luxury’ (if we can use that term) of not having to mandate one day only to (publicly) pull a trade the next if conditions deteriorate rapidly.

“As we have seen in recent weeks, this is more than a possibility if not an ongoing probability that very much underscores the notion that for issuers and investors alike, this is a market that is best served by getting in while it lasts!”

ING-DiBa today pre-announced a deal but one that is expected to be an uncommon Friday trade, a euro benchmark seven year mortgage Pfandbrief also set to take advantage of the current window ahead of the weekend. BayernLB, Deutsche, Erste, ING, SG and UniCredit have the mandate.

According to pre-announcement comparables circulated by the leads, ING-DiBa October 2028s were quoted at minus 3bp, mid, DZ Hyp’s green November 2029s issued on Tuesday at minus 2bp, and they also noted Berlin Hyp’s spread of minus 1bp today.

Berlin Hyp’s new issue today was launched after a mandate announcement yesterday, leads DZ, Erste, HSBC, LBBW and UniCredit opening books this morning with initial guidance of the mid-swaps plus 3bp area for the €500m no-grow seven year mortgage Pfandbrief, expected rating Aaa. After around 50 minutes, they reported books above €1bn, excluding joint lead manager interest, and after around two hours the spread was set at minus 1bp on the back of more than €1.5bn of orders. The final order book at re-offer was €1.18bn, excluding JLM interest.

“It was a very good trade,” said a syndicate banker at one of the leads, “very smooth.

“At less 1bp, it definitely worked – the final book we announced of €1.18bn implied that we lost a bit on the last move, of course, but if you have a three times covered book, you can afford to lose a few hundred million.”

He put the new issue premium at around 2bp. According to pre-announcement comparables circulated by the leads, Berlin Hyp May 2029s were quoted at minus 3bp, mid, while LBBW July 2029s were at minus 4bp.

The deal is Berlin Hyp’s first since its acquisition by Landesbank Baden-Württemberg (LBBW) was announced last month.

CBA’s new issue was announced and launched yesterday morning, with leads CBA, Barclays, BNP Paribas and SG going out with initial guidance of the 14bp area for the six year euro benchmark, expected ratings triple-A. The spread was set at 10bp on the back of orders above €1.7bn, and the size was set at €1.25bn (A$1.98bn).

The deal is the first Australian euro benchmark since CBA sold a €1.25bn eight year in October.

A syndicate banker involved in the trade said the 10bp outcome was in line with expectations at launch, and the €1.25bn size reasonable given a €1.7bn-plus book.

“It was good to see the Aussies back on the map and it did well,” he said. “The dynamic is different because it is neither CBPP-eligible nor ECB repo eligible, but this is a good name and it was well supported.”

He put the new issue premium at around 2bp, based on the issuer’s February 2029 paper trading at around 9bp, mid, with the shorter maturity of the new issue leading to fair value of around 8bp.

UniCredit Bank AG (HVB) hit the market yesterday morning after a mandate announcement on Tuesday, leads Commerzbank, Danske, Erste, Santander and UnICredit opening books in the morning with initial guidance of the mid-swaps plus 4bp area for the February 2027 euro benchmark public sector Pfandbrief, expected rating Aaa. After around an hour they reported books above €1bn, excluding JLM interest, and after around three hours they revised guidance to mid-swaps flat plus or minus 1bp, will price in range, on the back of orders above €2.3bn. The spread was ultimately set at minus 1bp and the size at €1bn on the back of a book above €2.2bn, pre-reconciliation.

“Five years is yet again the sweet spot,” said a syndicate banker at one of the leads.

A syndicate banker away from the leads said the ultimate pricing represented a new issue premium of 1bp.

“No complaints,” he said. “The 4bp starting point made it pretty clear what the ambition was – €1bn, through mid-swaps flat – and they were able to achieve that.”

LBBW issued only the second benchmark green covered bond in US dollars yesterday, a $750m (€660m) three year Reg S mortgage Pfandbrief that comes ahead of the redemption in May of the only previous green dollar benchmark – a $750m three year LBBW sold in May 2019.

“The issuer chose to loop in now and take advantage of the more stable backdrop,” said a banker at one of the leads. “After we announced the deal on Tuesday, the book grew with good momentum.”

Leads HSBC, LBBW, NatWest, RBC, TD and UBS opened books yesterday morning with guidance of the SOFR mid-swaps plus 42bp area and ultimately priced the February 2025 issue at 38bp on the back of books above $1.4bn.

“A very solid outcome,” said the lead banker.

He said the pricing was equivalent to flat to a maximum of 1bp wider than LBBW’s secondary euro levels. The spread was also 5bp inside where compatriot Deutsche Pfandbriefbank priced a $750m three year Reg S mortgage Pfandbrief on Wednesday of last week (9 February).