HSBC SFH and RBC were able to price comfortably oversubscribed €1.25bn five year and €2bn four year covered bonds, respectively, today (Tuesday), even if new issue premiums remain elevated, while Santander UK provided a fillip to the Sonia market with a convincing £1.5bn four year.

After a mandate announcement yesterday (Monday) afternoon, HSBC SFH leads Crédit Agricole, DZ, Goldman Sachs, Helaba, HSBC, Natixis and UniCredit went out with guidance of the mid-swaps plus 13bp area for the March 2027 euro benchmark, expected ratings triple-A. They reported books above €1.3bn, including €125m of joint lead manager interest, after close to two hours, and after around an hour and 40 minutes set the spread at 10bp on the back of books above €1.5bn, including €145m of JLM interest. The new issue was ultimately sized at €1.25bn, with books closing above €1.55bn.

“It went very decently,” said a syndicate banker at one of the leads. “In the end, they had almost €1.6bn of order and this was a very decent cover for the €1.25bn, plus they could move by 3bp and achieve the size target I understand they had.

“Given the troubled times, that makes it a very valuable trade.”

Compatriot Axa Home Loan SFH priced a €500m long four year trade at mid-swaps plus 5bp yesterday, which was adjudged to have represented a new issue premium of around 4bp.

“It’s fair to say that fair value for a new five year by this issuer – which is this newly formed blend of former HSBC retail France, plus My Money Bank – is around 5bp over,” said the lead banker, “so at 10bp over, we issued with a final concession of 5bp.”

The deal comes as the issuer is being acquired along with HSBC’s French retail operations by the My Money Group, which already issues covered bonds via MMB SCF, with the two issuers expected to be kept separate.

“This was apparently enough to do the trick here for €1.25bn,” added the lead banker. “Driving it tighter would have probably resulted in investors pulling or reducing their orders, so 10bp was basically what the market broadly expected, and this then provided us with a fairly comfortable level of subscription.”

Royal Bank of Canada (RBC) leads Commerzbank, Crédit Agricole, LBBW, Lloyds, RBC and Santander announced the Canadian’s trade this morning and opened books with guidance of the mid-swaps plus 12bp area for the March 2026 euro benchmark, expected ratings triple-A. After an hour and three-quarters, they reported books above €1.5bn, including €75m of JLM interest, and after close to three hours, they fixed the spread at 9bp on the back of books above €2.15bn. The size was then set at €2bn (C$2.80bn) on the back of books above €2.3bn, and the final book was above €2.125bn.

The spread is inside the 10bp re-offer level achieved by Bank of Nova Scotia (BNS) on a €2bn four year deal last Tuesday (8 March), which in turn followed a €2.5bn four year trade at 6bp from CIB on 3 March.

“It was pretty pleasing to come 1bp inside the recent Scotia four year for the same size,” said a syndicate banker at one of RBC’s leads, “particularly as the market certainly isn’t better and is probably worse. Moving 3bp for the €2bn size, when some other issuers have only moved a couple of basis points, was also a pretty good result and reflective of more pricing leverage.

“That and the speed of execution are testament to the continued appetite investors have for Canadian credits in general and for geographic diversity away from some of the geopolitical challenges closer to home.”

He said the new issue premium was arguably anything from zero – focusing on BNS’s new issue – to 2bp-3bp. According to pre-announcement comparables circulated by the leads, RBC June 2026s were quoted at 3.5bp, mid, and its April 2027s at 7bp, while BNS’s four year was at 7bp and CIBC’s at 4bp.

RBC priced the €2bn April 2027 deal in January and the lead banker said today’s choice of the four year tenor fit alongside this and its overall maturity profile in covered and other instruments. With the exception of Toronto-Dominion, RBC’s Canadian peers have all been active in the interim, while its new issue comes after it reported its latest results on 24 February.

“Clearly the option of covered bonds – in whatever currency – is something that’s very attractive to the universal banks,” said the lead banker. “RBC has been monitoring the market and it felt a little congested last week, but elected to step in now – this side of this week’s central bank meetings – as the outlook doesn’t appear to be getting better anytime soon.

Santander UK attracted over £1.6bn of demand to a four year Sonia-linked covered bond today, allowing it to price a £1.5bn (€1.79bn) March 2026 deal at plus 43bp, following guidance of the 45bp area.

The covered bond is the first from a UK issuer in any currency since Russia’s invasion of Ukraine.

“Demand was really pretty impressive,” said a syndicate banker at one of the leads, “with the £1.6bn order book for a £1.5bn transaction demonstrating that the sterling market is capable of offering meaningful size to these covered transactions alongside the euro and dollar alternatives folks have.”

Santander UK’s deal comes after Australia’s Westpac last Tuesday issued a £700m four year Sonia-linked covered bond for which pricing was fixed at 45bp from the outset.

“They went out pretty defensively, just 45bp, the number, for the deal they wanted,” said a banker away from Santander UK’s leads. “Having a really nice UK deal come through now just shows there is liquidity out there, and maybe some accounts are just being a bit more selective.”

The lead banker said it was natural for a UK covered bond, which enjoys better regulatory treatment in sterling, to come inside an Australian, but said the starting point flat to Westpac was aimed at looking attractive to investors. This then enabled Santander UK to price a twice as large deal 2bp tighter, he noted.

“They were pretty sensitive to investors wanting to get hold of the securities, so they kind of upsized to £1.5bn,” he added, “and they elected to only move a couple of basis points, reflecting the fact that there is a fair bit of volatility around and 43bp is still a pretty decent level relative to what they might achieve in euros or dollars.”