As many as four euro covered bonds are expected to hit the market tomorrow (Thursday), including Eika and RBI, despite new issues for Luminor and Oma Savings Bank achieving modest outcomes today, with bankers seeing differentiated demand across names and maturities.

Estonia’s Luminor priced its €500m no-grow five year covered bond at 22bp over mid-swaps on the back of some €600m of orders, while Finland’s Oma priced a €350m no-grow long four year deal at 8bp, 2bp inside initial guidance on the back of similar demand. Lead bankers said the CEE nature of the former’s credit and sub-benchmark character of the latter’s were always expected to constrain demand.

“Like some of the other recent sub-benchmarks or benchmarks from smaller or less established issuers, what we tend to see is that investors may like to take the opportunity to get a pick-up, but some of them like to get more clarity on where you’re landing,” added a syndicate banker involved in today’s supply, “so where there’s some price involved, when you set the final terms the book grows a bit more.

“And let’s not forget,” he added, “it’s still a volatile market, so you don’t have the entire world chasing new bonds at the moment.”

Luminor’s deal was seen as offering a pick-up of around 6bp versus fair value by bankers away from the leads, with one noting that while this was in line with his expectations and inside the 25bp spread at which the Estonian tapped the market with its first and only previous benchmark, a €500m five year in March 2020, it was wider than where the issuer would have tapped the market ahead of the Ukraine war.

“As we’ve seen with other CEE trades earlier this year, particular clients are looking at these names, but not the broader range of investors that you might have got last year,” he added.

Lead bankers saw the pricing of Oma’s €350m long four year at 8bp as offering a 5bp new issue premium. One said that they might have hoped and pushed for a re-offer 1bp tighter, but that key accounts resisted such a move, and that 8bp represented a reasonable outcome.

Oma has said that it plans to tap the €350m deal up to a benchmark size of €500m at some point, according to the lead banker, who said some larger German accounts had already indicated an interest in investing once the larger size is achieved.

The primary market will be further tested tomorrow, when as many as four issuers could hit the market, according to syndicate bankers.

Raiffeisen Bank International (RBI) yesterday announced plans for a €500m no-grow five year mortgage covered bond via Crédit Agricole, DZ, Natixis, RBI and UniCredit, and the new issue is expected tomorrow alongside an Eika Boligkreditt €500m no-grow eight year via Crédit Agricole, Deutsche, Natixis, Santander and UniCredit. At least two other issuers are said to be potentially joining the pair.

“There’s quite a pipeline,” said a syndicate banker. “There’s definitely stuff coming to the market for the rest of the week and it could be quite busy.

“If you hit the right spot,” he added, “with the right issue from a jurisdiction that is maybe not oversupplied, and you can get some of those bigger accounts that can buy in size, then you can still have these larger order books.”

He pointed to a €500m no-grow 10 year green debut from Nationale-Nederlanden Bank (NN Bank) yesterday that attracted a peak book above €2.3bn and was tightened from initial guidance of the 12bp area to 7bp and achieved a new issue premium of zero to 1bp.

“This was a great one,” said a syndicate banker at one of the leads. “The book was a bit mad – almost five times the trade – and there was very little concession in the end.”

The strong outcome came after big order books for ESG trades from Berlin Hyp and La Banque Postale last week.

However, questions remained about the extent of demand at the very long end of the curve as a €500m no-grow 12 year mortgage Pfandbrief for Bausparkasse Schwäbisch Hall yesterday attracted modest peak demand above €800m, after Nationwide Building Society on Monday had attracted €650m of orders to a €500m 15 year. Pricing on the German’s deal was tightened from 8bp to 6bp, representing a new issue premium of around 4bp.

“There seems to be a bit of a glass ceiling north of 10 years,” said a syndicate banker at one of BSH’s leads. “This is definitely one of the most appreciated issuers in this market due to its quality and despite the fact that they have tended to be one of the richest, but even for them it was a bit of an uphill battle.

“We had hoped for something better than the re-offer of 6bp and €630m allocatable book, but they could live with it, particularly given they appreciate getting that duration.”