The covered bond market proved accommodating to a €500m long four year trade from Axa Home Loan SFH today (Monday) that attracted some €1.5bn of demand, but other issuers achieved more modest results, with Slovakia’s VUB pricing a €500m five year in the middle of initial guidance.

A syndicate banker involved in one of today’s deals that a lack of disruptive headlines over the weekend and a stable opening for equities and rates was sufficient for issuers to move ahead, even if the primary market was as busy as anticipated.

“At the moment, we just want a sort of stable open, and a 4 or 5 out of 10 day is good enough,” she said.

Syndicate bankers said the hawkish outcome of the latest ECB governing council meeting on Thursday had had little direct impact on the covered bond market – even if the end of APP was brought forward – but had underlined the rates outlook, noting that 10 year swap rates were above 1% today.

Axa Home Loan SFH leads Crédit Agricole, HSBC, NordLB, SG and UniCredit went out with guidance of the mid-swaps plus 9bp area for the €500m no-grow October 2026 issue, expected ratings triple-A. Demand peaked above €1.5bn and the deal was priced at 5bp, with the final book above €1.4bn, excluding joint lead manager interest.

“The best trade today was definitely Axa,” said a syndicate banker away from the leads. “It’s short, from a core name, it only paid 4bp-5bp, and in terms of new issue concession, book momentum and spread tightening, it was quite standard.

“It very much looked like a trade that could have been priced two to three weeks ago.”

ANZ New Zealand and Korea Housing Finance Corporation (KHFC) both tightened their pricing 2bp and were deemed to have paid 4bp-6bp of new issue premium, with the New Zealander pricing its €750m five year deal at 15bp on the back of some €950m of orders, and the Korean its €600m three year at 18bp on the back of a book above €700m.

“The re-offer of 15bp is not completely what we hoped for,” said a syndicate banker at one of ANZ NZ’s leads, “but getting €750m was more important than tightening by an extra basis point.

“It’s modest days.”

Another lead banker said the €750m size was the top end of the €500m-€750m range the issuer had in mind, and that although conditions are difficult, the market clearly remains open.

“Liquidity and appetite in the covered bond space is pretty good,” he said. “Anywhere up to five or seven years is going well.

“Investors are getting very attractive spreads in sub-five year maturities versus what they are used to over the past couple of years, while they’re getting a positive spread and positive yield. And especially versus an SSA like KfW at minus 30bp – that’s a nice pick-up.”

HSBC SFH (France) is expected tomorrow (Tuesday) with a five year euro benchmark via Crédit Agricole, DZ, Helaba, HSBC, Goldman Sachs, Natixis and UniCredit, following a mandate announcement today.

ANZ NZ leads ANZ, BNP Paribas, Deutsche and DZ opened books with guidance of the mid-swaps plus 17bp area for the March 2027 euro benchmark, expected ratings triple-A. After around two hours, they reported books above €750m, excluding JLM interest, and after close to two hours the spread was set at 15bp on the back of orders above €800m. The size was ultimately set at €750m on the back of €950m of demand, excluding JLM interest.

National Australia Bank priced a €1.5bn five year at 12bp over mid-swaps on Wednesday and the lead banker said the success of that trade pointed to ANZ NZ’s deal working, noting that New Zealand issuers typically trade 3bp-5bp back of the Australian parents.

KHFC leads Citi, Crédit Agricole, ING, SG and Standard Chartered opened books with guidance of the mid-swaps plus 20bp area for the March 2025 euro benchmark social covered bond, expected rating triple-A. After around three hours and 20 minutes, they set the spread at 18bp on the back of more than €660m of demand, including €30m of JLM interest. The deal was ultimately sized at €600m on the back of books above €720m, pre-reconciliation, and the final order book was above €700m.

According to pre-announcement comparables circulated by the leads, KHFC February 2025s and July 2025s were quoted at 12bp, mid, its June 2026s at 14bp, and its October 2028s at 19bp (all social bonds).

A €500m no-grow five year deal for Slovakia’s Vseobecna uverova banka (VUB) proved the most challenging of the day.

Leads Danske, DZ, Erste, IMI-Intesa Sanpaolo and UniCredit went out with guidance of the mid-swaps plus 18bp area for the €500m no-grow March 2027 euro benchmark, expected rating Aa1. After around an hour and 50 minutes, they reported books above €500m, excluding JLM interest. The final spread was set at 18bp on the back of books above €600m, including €50m of JLM interest.

A lead banker said the new issue suffered from the generally difficult conditions, with only the illiquidity of Slovakian paper making execution more challenging. He cited Slovenska sporitelna June 2026s at around 5.5bp and VUB March 2026s and June 2029s at around 8bp, but put fair value for a new issue at around 9bp, implying a new issue premium of around 9bp.

Other bankers concurred, but attributed at least part of VUB’s outcome to Slovakia neighbouring Ukraine.

“Investors do not like CEE risk at the moment,” said one, suggesting VUB’s outcome would deter other issuers from the region.

The banker said some investors are also more generally nervous about the potential direction of spreads, even if they do not expect the war in Ukraine to spill over.

“Plus 18bp seems OK, but it’s still a risk,” he said. “A week or two from now, it may be plus 40bp or plus 50bp – nobody really knows, but if we remember back to March, April 2020 when the markets dried out, you couldn’t place bonds at all at these tighter levels. Some accounts have reflected that to us in recent days.

“I guess the issuer must be pretty pleased to have got the deal away in some form given we don’t know what’s going to come up,” he added. “At the end of the day, they understood it is the price investors are requiring today.”