RLB NÖ-Wien got the post-APP era off to a successful start today (Tuesday), sizing a three-and-a-half year euro benchmark at €750m on the back of some €1bn of demand ahead of the 8 July Directive implementation deadline, supported by the Eurosystem only reducing its order from 30% to 20%.

Raiffeisenlandesbank Niederösterreich-Wien’s new issue is the first CBPP3-eligible benchmark to settle in the coming month (on 5 July), with the end of new net purchases under the European Central Bank’s Asset Purchase Programme from 1 July having led market participants to expect a cut to around 10% of new issues, following a reduction from 40% to 30% at the end of March for deals settling from 1 April onwards as it began winding down APP.

However, the Austrian central bank took a higher than expected 20% of today’s deal. A cut to 20% had been deemed possible as early as the end of April, meaning the Eurosystem is moving slower and scaling back more gradually than expected.

A banker said that this was not wholly surprising in the current fragile market conditions.

“And it’s not like they are further fuelling inflation by only cutting modestly,” he added.

Although re-offer levels in the primary market have widened more than expected amid the volatility of recent months, CBPP3’s continued involvement in the asset class as more elevated levels than anticipated is expected to lend some support to covered bond spreads.

RLB NÖ-Wien had set up the anticipated CBPP3 test yesterday by announcing the mandate for its new issue just as the last trade to benefit from the prior 30% order was being launched – a €800m 15 year for Deutsche Bank – and with the pipeline otherwise clear.

Leads Barclays, Crédit Agricole, Erste, RBI and UniCredit then this morning opened books for the January 2026 issue, expected rating Aaa, with guidance of the mid-swaps plus 16bp area. After a first update citing orders above €600m, the spread was set at 15bp on the back of books above €800m, and the deal was sized at €750m on the back of books above €1bn, including €30m of joint lead manager interest.

A syndicate banker at one of the leads attributed much of the deal’s success to the three-and-a-half year maturity.

“It’s a very good outcome,” he said. “The issuer opted for the shorter maturity to make sure that it could ideally get more than €500m and the defensive tenor clearly explains the strong result.

“We were able to tighten, albeit by 1bp, which is a good thing, and shows some progress.”

Market participants at and away from the leads put fair value at 3bp-4bp over, although one noted that a Raiffeisenlandesbank Oberösterreich €500m seven year deal was last Tuesday priced at 19bp and seen at 18bp today.

RLB NÖ-Wien’s trade comes at the end of a first half of the year in which Austrian issuers have taken a disproportionately large share of euro benchmark issuance. As well as the easing of Eurosystem involvement in the asset class, issuers have cited the approaching 8 July EU Covered Bond Directive as a reason for the busy six months, saying the national authorities could take several months to approve updated programmes for issuance afterwards.

“More significantly than the ECB timing, that was clearly an incentive for the issuer here,” said the lead banker.