Eika Boligkreditt priced a €500m eight year covered bond in the middle of initial guidance after achieving only minimal oversubscription today (Thursday) amid deteriorating conditions that dissuaded RBI from entering the market, although ING Belgium could successfully print €1bn.

With the exception of a €500m 10 year NN Bank green debut on Tuesday, euro benchmarks had in the first three days of the week achieved less impressive results this week than were generally on the table last week. However, Eika Boligkreditt’s deal was announced yesterday (Wednesday) afternoon for expected launch today, while Raiffeisen Bank International (RBI) was expected to follow up on a Tuesday mandate announcement with a €500m no-grow five year this morning.

Another two issuers had also been said to be eyeing launch today and ultimately ING Belgium was first to open books this morning. Leads Danske, DZ, ING, LBBW, RBI, Santander and SG went out with guidance of the mid-swaps plus 9bp area for a euro benchmark-sized May 2029 mortgage Pandbrieven, expected ratings triple-A.

A syndicate banker at one of the leads said the deal achieved strong momentum from the start, but that it was clear the market today was more difficult than expected.

“Yesterday seems like a long time ago now, but if you remember, it was a relatively positive market,” he said. “Things went quite well and it was all green.

“Today, it was the opposite.”

Eika Boligkreditt nevertheless followed up on its mandate and entered the market in the wake of ING Belgium. Leads Crédit Agricole, Deutsche, Natixis, Santander and UniCredit opened books with guidance of the mid-swaps plus 13bp area for the €500m (NOK5.11bn) no-grow eight year, expected rating triple-A.

But while ING Belgium was able to announce a book above €1bn after a little over an hour, set its spread 4bp tighter at 5bp on the back of over €1.5bn of demand, and print a €1bn deal with over €1.4bn of orders good at re-offer, Eika priced its deal in the middle of initial guidance after reaching orders above €500m, and got a final book of around €550m.

RBI, meanwhile, decided after a call this morning to hold off on entering the market.

“It became obvious that the stock market and credit markets would be opening deeply in the red,” a banker told The CBR, “and so it was probably not the right time to proceed with RBI, irrespective of the fact that it was well prepared.

“We are back to ugly days,” he added. “This is not exactly something that happened overnight, but over the last couple of days this has gradually been changing into a more challenging environment.”

A banker away from RBI’s syndicate said the Austrian had made the right call.

“Hats off to them,” he said. “I think investors will be happy, because you get no thanks for pushing out a trade nobody wants.

“There’s no egg on your face by just waiting for better conditions – there’s nothing to say that just because you have announced you then have to go immediately. Wait until the right window – there will be good windows, I’m sure of it.”

According to bankers away from the leads, Eika ended up paying a new issue premium of around 6bp-7bp. One suggested that significant supply from Norway this year, the lack of CBPP3-eligibility and eight year maturity could all have contributed to making execution more challenging.

“We have seen in the past week or so increasing resistance to duration,” he said, “with the later 10 years less fantastic than the first. Eight years was probably not helpful for a relatively smaller issuer from a jurisdiction where we have seen plenty of supply this year.

“There was nothing wrong with the price they went out with,” added the banker, “but all those factors just give investors an excuse to pass, and they are happy to do so given how much uncertainty there is and when you don’t know if the market is going to go in one direction or the other.”

In contrast, the rarity of Belgian supply in general and ING Belgium specifically – its last euro benchmark was a €1.25bn 10 year in February 2020 – was seen as having contributed to the success of today’s trade, which a lead banker said paid at most 2bp of new issue premium.

“You could almost say you have to have a little bit of this one,” he said. “We had very strong momentum from the beginning, with all the classic European investors there – no tourists, no fast money – and the ECB order was obviously also helpful.

“€1bn at 5bp in a fragile market is a very strong deal, for sure.”

A syndicate banker said any issuer looking to tap the market would have to be mindful that new issue premiums may be on the rise.

“A couple of weeks ago we were saying that this market was sort of walking on water again,” he said. “But this is no longer the case – for now, at least.”