Raiffeisenlandesbank Oberösterreich could today (Wednesday) print a €500m no-grow five year deal 1bp inside €750m from RLB NÖ-Wien last week, with the size cited as helping the latest Austrian achieve a lower new issue premium, in a market otherwise seeing only sub-benchmark supply.

Following a mandate announcement yesterday (Tuesday) morning, Raiffeisenlandesbank Oberösterreich (RLB OÖ, ticker RFLBOB) leads DekaBank, Deutsche, DZ, Erste and RBI opened books this morning with guidance of the mid-swaps plus 12bp area for the €500m no-grow April 2027 mortgage covered bond, expected rating Aaa. After around 50 minutes, the leads reported books above €1.1bn, excluding joint lead manager interest, and after around an hour and 25 minutes, they fixed the spread at 7bp on the back of books above €1.6bn. The final order book was above €2.25bn, including €140m of JLM interest.

RLB OÖ’s spread is 1bp inside that achieved by compatriot RLB NÖ-Wien on the last euro benchmark to hit the market, a €750m five year on Tuesday of last week priced at 8bp over, which had also started at guidance of the 12bp area, although for a “euro benchmark” rather than specific size. A syndicate banker at one of the leads attributed the tighter outcome partly to the €500m size being known at the outset, meaning investors could place their orders with more certainty.

“This one was probably slightly more dynamic than RLB NÖ-Wien’s – which was a success in its own right,” said a syndicate banker at one of RLB OÖ’s leads. “We managed to tighten by 5bp rather than 4bp.

“RLB NÖ-Wien was keener on playing the size option, which took some of the price dynamics off the table. But in the end both issuers can be happy with their respective trades.”

According to pre-announcement comparables circulated by the leads, RLB NÖ-Wien’s five year was quoted at 5.5bp, mid, while RLB OÖ’s September 2026s were at 4bp and July 2028s at 5.5bp, and the lead banker put fair value at around 5bp. The new issue premium of 2bp is at the lower end of levels achieved by issuers since Russia’s invasion of Ukraine.

RLB OÖ’s last euro benchmark was a €500m 15 year issued in January 2020.

Fellow Austrian Hypo Tirol is due with a €300m no-grow five year covered bond, expected rating Aa1, after announcement this morning. ABN Amro, DekaBank, Erste and LBBW are leads.

The issuer’s €500m October 2026s were quoted at 6bp, mid, and its €500m March 2031s at 11.5bp, according to pre-announcement comparables circulated by the leads.

Sp Mortgage Bank hit the market today after a mandate announcement and investor calls yesterday. Leads BNP Paribas, LBBW and Nordea this morning went out with guidance of the mid-swaps plus 7bp area for the €300m no-grow April 2025 Finnish covered bond, expected rating triple-A. After an hour and a half, they reported books in excess of €550m, excluding JLM interest, and set the final pricing at mid-swaps plus 4bp. More than €620m of demand, excluding JLM interest, was good at re-offer.

A lead banker said the deal went well, being more than twice subscribed and with the size and trading levels of Finnish paper at the tighter end of the market not suggesting any multi-billion euro order book was on the cards.

Sp Mortgage Bank usually prints €500m covered bonds but issued the sub-benchmark with an unusually short, three year maturity due to a specific pool management requirement, according to the banker, who said the issuer will return to benchmarks afterwards. He said that in spite of the sub-benchmark size, they used Sp Mortgage Bank’s benchmarks to calculate fair value, and won over investors sufficiently to limit the new issue premium to 3bp-4bp, rather than the issuer having to pay premiums similar to Finnish sub-benchmark names.

The burst of supply after the long holiday weekend comes after the European Central Bank last Thursday maintained a holding position vis-à-vis the end of net new asset purchases and interest rates.

“That the bank remained committed to its guidance has given some comfort to issuers that there is no time like the present, despite the already significant flow of primary covered bond activity year-to-date,” said Rabobank analysts.

“With the ECB’s bid still in play for the time being and a buyers’ market prevailing, those looking to fund will be very much incentivised to do so sooner rather than later. That too, we would argue, brings comfort.”

Today’s new issues settle ahead of the end of April – as Hypo Tirol’s is expected to – after which market participants believe a further cut in standard CBPP3 orders to 20% is possible, following a reduction from 40% to 30% at the beginning of this month.

However, syndicate bankers were unconcerned about any further step-down in Eurosystem activity.

“Issuers are well aware of that,” said one, “but at the end of the day, the private sector bid is quite good. The elevated yields are driving up demand and we don’t see spreads widening.”

Another syndicate banker said that, excepting Hypo Tirol’s sub-benchmark, he does not expect further euro benchmark supply this week.

“I’d be surprised if there was much more,” he added. “Even the three deals this week is more than I would have expected – it’s still vacation time on the continent.”