Rabobank priced the first 10 year euro benchmark covered bond in over a month and biggest in over two years today (Monday), a €1.75bn deal that showed the maturity to be comfortably open at reasonable new issue premiums, while Argenta has mandated a €500m seven year.

Today’s Dutch 10 year deal is the first in the maturity since Norway’s Sparebanken Vest Boligkreditt issued a €750m 10 year at 5bp over mid-swaps on 13 January, with the long end of the curve having been buffeted by inflation and geopolitics-induced volatility in the interim.

Rabobank leads Barclays, Crédit Agricole, DZ, LBBW, Rabobank and UBS announced the new issue this morning and opened books with initial guidance of the mid-swaps plus 10bp area for a March 2032 euro benchmark, expected rating Aaa. After around an hour and 10 minutes, they reported books above €2bn, excluding joint lead manager interest. After an hour and 40 minutes, they set the spread at 6bp on the back of books above €2.6bn, and ultimately sized the deal at €1.75bn on the back of more than €2.9bn of orders, pre-reconciliation, and the final order book was above €2.5bn.

“It seemed to go extremely well,” said a banker away from the leads. “I mean, we’re talking a very sizeable trade with just 3bp of NIP in the 10 year tenor.”

A lead syndicate banker said that, with tensions around Ukraine not having increased significantly over the weekend, the leads were confident in going out with the new issue this morning.

“Rabobank is probably the candidate to go for when testing a maturity that hasn’t been tapped for five weeks,” said a syndicate banker at one of the leads. “It is an absolute flagship name.

“At the same time, they definitely responded well to market sentiment. They offered an eye-catching 10bp as the starting point and people know that they can do sizeable trades.”

Rabobank issued a €1.5bn 10 year covered bond as recently as November and that December 2031 bond was quoted at 3bp, mid, according to pre-announcement comparables circulated by the leads, and bankers put fair value for the new issue close to that, implying a 7bp new issue premium at the start and ultimate pick-up of around 3bp.

“We set the 6bp spread early, and then it was a matter of solving for size,” said the lead banker.

The new issue is the largest 10 year euro covered bond since compatriot ABN Amro sold a €2bn 10 year in January 2020.

A syndicate banker away from the leads said the outcome bodes well for other issuers looking at the maturity.

“It’s important to remember that we’re talking about a best in class name, but even if they won’t work to the same extent, 10 years can work well for other issuers if they are prepared to leave a little bit on the table.

“We have a relative value scheme that works well across the covered bond spectrum at the moment,” he added. “All of a sudden we are talking about 65bp or 66bp over Bunds for Rabobank – when was the last time we saw that?”

Argenta Spaarbank is expected next in euros, with Barclays, Belfius, LBBW and Natixis mandated to lead a €500m no-grow seven year deal, according to a mandate announcement today.

The Belgian bank has previously issued 10 and 20 year benchmarks, and according to comparables circulated by the leads, its February 2031 paper was trading at plus 2bp, mid. Belfius June 2028s and October 2029s were at 0.8bp and 1.7bp, respectively, BNP Paribas Fortis March 2028s at 0.5bp and ING Belgium February 2030s at 2.0bp, while Axa Bank Europe SCF (Belgian collateral) March 2029s were at 2.4bp and its February 2028s, issued two weeks ago, at 3.1bp.

A banker away from the leads said that while Argenta’s outstandings might imply fair value of around mid-swaps flat, it would more realistically be around 1bp-2bp, particularly after ING-DiBa came at 1bp over mid-swaps with a €1.5bn seven year mortgage Pfandbrief on Friday.

After a mandate announcement on Thursday, Leads BayernLB, Deutsche, Erste, ING, SG and UniCredit opened books with initial guidance of the 4bp area for the February 2029 euro benchmark, rated Aaa. After an hour and a quarter, they reported books above €1.5bn, excluding JLM interest, then after an hour and 50 minutes set the spread at 1bp for an expected size of €1.25bn-€1.5bn on the back of a €1.8bn book, pre-reconciliation. The deal was ultimately sized at €1.5bn on the back of orders above €1.9bn, pre-reconciliation, and the final book was above €1.8bn, excluding JLM interest.

Given that DZ Hyp and Berlin Hyp had priced seven year €1bn and €500m Pfandbriefe at 1bp through mid-swaps, respectively, the former in green format, on Tuesday and Thursday of last week, the plus 1bp spread paid by ING-DiBa came as a surprise, said a banker away from the leads. He put fair value close to minus 3bp, where ING-DiBa October 2028s were quoted by the leads.

“It’s a rarer name,” he said, “but the pool is no worse, and I would have expected them to come a bit tighter. Maybe it’s because it was a Friday and there were already a few Pfandbriefe in the market, or there were more headlines on the Ukraine situation than earlier in the week.

“They were clearly looking for size,” he added.

Kommunalkredit Austria is also in the pipeline, with a €250m no-grow five year public sector covered bond, with Erste, Commerzbank, RBI and UniCredit as leads, following a mandate announcement today.

DekaBank attracted some €1bn of orders for a €250m five year public sector Pfandbrief today. After initial guidance of the mid-swaps plus 3bp area, leads DekaBank, Erste and UniCredit priced the March 2027 trade, expected rating Aaa, at minus 1bp, with demand peaking above €1bn and more than €900m of orders good at re-offer, according to a banker at one of the leads, who put the new issue premium below 1bp.