BPCE pushed euro covered bond issuance out to eight years today (Monday) in a €1.5bn deal, and three benchmarks could hit the market tomorrow – including Slovenská sporiteľňa in a test of appetite for CEE names – as the second quarter picks up where the busiest Q1 since 2011 left off.

BPCE SFH leads Commerzbank, HSBC, Natixis, Nordea, Santander, Scotiabank and UniCredit opened books with initial price thoughts of the mid-swaps plus 12bp area for the April 2030 euro benchmark-sized obligations de financement de l’habitat, rated triple-A. Following an update putting books above €1bn, the spread was set at 9bp on the back of over €2bn of demand. The deal was ultimately sized at €1.5bn and the final book good at re-offer was some €1.95bn.

The French issue is the longest since a €500m 10 year for Crédit Mutuel Home Loan on 23 Feburary, the eve of Russia’s invasion of Ukraine, and comes after Nordea Mortgage Bank on 24 March reopened the seven year sector with a €1.5bn deal.

“We were all waiting for something longer than seven years,” said a syndicate banker away from the leads, “although eight years is not that much longer – it used to be an odd maturity.

“We are nevertheless slowly creeping towards the 10 year, and that will be the next real test of demand for duration.”

A lead banker agreed the progression further along the curve had been encouraging, but said that issuers still need to tread carefully.

“Hopefully we can get a period of rates stability,” he said, “but it’s a case of ‘steady as you go’ – make sure you get your timing right, which they absolutely did today.”

The euro benchmark is BPCE SFH’s fourth of the year, taking its amount raised in benchmarks to €5.25bn, while sister issuer CFF sold a €1.25bn deal last month.

The lead banker put the new issue premium at around 4bp, with a banker away from the leads putting it at a similar level.

“It’s a similar story to what we have seen the last couple of weeks,” he added, “with roughly 8bp of NIP at the start.”

However, he said that, alongside mandates publicly announced today, a core European is likely to hit the market tomorrow (Tuesday) with a more aggressive approach.

“I will be very curious to see how this works,” he added.

Bawag PSK has mandated BayernLB, DekaBank, Erste, Helaba and UniCredit for a long six year (July 2028) euro benchmark, which is expected tomorrow.

According to pre-announcement comparables, the Austrian’s January 2028s and October 2029s were quoted at 4bp and 4.5bp over mid-swaps, mid, respectively, while Erste July 2028s issued in January were at 2.5bp.

Slovenská sporiteľňa is also expected tomorrow, with a €500m no-grow five year deal. Commerzbank, Erste, IMI-Intesa Sanpaolo, LBBW and Natixis have the mandate.

The Slovak bank’s only previous benchmark, a €500m seven year (December 2026s) issued in June 2019, was seen at mid-swaps plus 6bp, mid. A March 2027 benchmark issued by compatriot VUB at 18bp on 14 March was quoted at 17.5bp, while parent Erste’s January 2027s were at 2bp and its July 2028s at 1bp.

VUB’s deal was priced in the middle of guidance on the back of a final book above €600m when geopolitical tensions were higher, and the new issue show whether the market is open for other CEE names, according to a banker at one of Slovenská sporiteľňa’s leads.

“Sentiment towards CEE names has calmed down a bit,” he said, “and, with it being part of Erste, it might go very well.”

Oldenburgische Landesbank is meanwhile due with a seven year sub-benchmark after investor calls today and tomorrow, following an announcement this morning. It has mandated Commerzbank, Erste and LBBW for the mortgage Pfandbrief, expected rating Aa1, and  lead banker said the deal could emerge on Wednesday or Thursday.

The bank’s debut sub-benchmark, a €350m March 2031 deal issued in March 2021, was quoted at 6.5bp over mid-swaps, mid. A SaarLB €250m seven year public sector Pfandbrief issued in February was seen at 1.5bp and SaarLB May 2031s at 3.5bp.

The brisk supply comes after a strong March and indeed first quarter for the covered bond market. Euro benchmark issuance of €33.1bn last month is the highest monthly volume since January 2019, according to LBBW analysts, while first quarter supply of €76.1bn makes it the busiest Q1 since 2011.

A banker noted that these highs had been achieved despite the long end of the market being all but closed for much of the quarter.

“Buyers are very limited in what they want, but issuers are happy to follow,” he said. “There have also been a number of trades of fairly big size – more than just one or two of €1.5bn, €1.75bn or €2bn – and that has certainly helped volumes.”

He cited Santander UK as an example, with the issuer having on Thursday sold its biggest ever euro benchmark – and the first from the UK this year – a €1.75bn (£1.48bn) five year.

“That was not a trade that was on the cards for weeks,” he added, “so you have seen a bit of an acceleration of funding plans for one or the other issuer. And some other formats have not been as supportive as covereds.

“We expect this level of activity to continue, at least for now.”