Caffil and MünchenerHyp were able to achieve new issue premiums at the low end of recent supply today (Tuesday) on €750m and €700m deals, respectively, in the popular five year part of the curve, with the French issuer’s ESG flavour and the German’s signature cited as contributing to their successes.

After the Caisse Française de Financement Local (Caffil) mandate was announced yesterday (Monday), leads BNP Paribas, ING, La Banque Postale, LBBW and Natixis opened books for the benchmark-sized November 2027 green obligations foncierères, rated Aaa/AA+AAA (Moody’s/S&P/DBRS), with guidance of the mid-swaps plus 15bp area. After around an hour and 25 minutes, they reported books above €1.1bn, excluding joint lead manager interest. After almost two and a half hours, they revised guidance to 12bp+/-1bp, will price in range, and set the size at €750m on the back of books above €1.45bn. The deal was ultimately priced at 11bp, with around €1.6bn of demand good at re-offer, excluding JLM interest.

According to pre-announcement comparables circulated by the leads, Caffil September 2027s were quoted at 5.5bp, February 2028s at 8bp, April 2028s at 8bp, and green November 2029s at 11bp. A lead banker for the new November 2027 green issue put the new issue premium at 4bp.

“A very successful trade, moving four basis points,” said a syndicate banker away from the leads. “It’s green, which still helps one or the other account get involved, and I heard that at an early stage they made it clear that the maximum for this one was €750m, so as soon as they communicated that the book was above a billion, investors knew it was a safe bet.”

Another highlighted the unusually short maturity for Caffil, and said this helped demand for the frequent issuer. Bankers noted that the result was stronger than that achieved by the French issuer on 10 October when it sold a longer dated, €1bn long six year issue that attracted some €1.35bn of orders.

The unexpected and unexplained absence of a Eurosystem CBPP3 order for the last transaction contributed to its outcome. Central banks and official institutions are understood to have taken 35% of the new issue.

Some 78% of the paper was meanwhile placed with ESG investors. Caffil’s green covered bond is the first off a new and enlarged green, social and sustainability framework established last month that encompasses issuance by both Caffil and parent SFIL.

Following a mandate announcement yesterday, leads Credit Suisse, DZ, Helaba, NordLB and UBS opened books for MünchenerHyp’s benchmark-sized August 2027 mortgage Pfandbrief, rated Aaa, with guidance of the plus 5bp area this morning. After around an hour and a half, they reported books above €750m, including €80m of JLM interest, and after a little over two hours they set the spread at 1bp on the back of orders above €950m. They ultimately sized the issue at €700m on the back of more than €850m of orders good at re-offer, including €80m of JLM interest.

A lead banker put fair value at minus 2bp-1.5bp through mid-swaps, with the new issue premium of 2.5bp-3bp being well below the high single-digits more typically seen on new issues.

“People are on this name almost always accepting tighter prints than for almost any other name,” he said. “It’s definitely a good achievement for the issuer.

“It demonstrates that if a well appreciated name comes along in a well appreciated tenor, there is more on the table than a final concession of, say, 8bp,” he added.

With the plus 1bp spread was the optimal outcome for the issuer, MünchenerHyp was keen to take more rather than less out of the market, according to the lead banker, and while €750m was adjudged too much given the final level of demand, the book was deemed sufficiently strong to support more than the next biggest standard option, €625m. The deal was therefore sized at €700m, with the lead banker citing recent deals of sizes such as €1.35bn and €600m as demonstrating that the market has become less dogmatic.

“It is a pragmatic way of looking at things,” he said. “We didn’t get any negative feedback from investors.”

The Mortgage Society of Finland issued a €300m five year covered bond via Danske, Erste and Swedbank. Initial guidance of the mid-swaps plus 25bp area was revised to 25bp+/-2bp on the back of more than €390m of demand, and the transaction was ultimately priced at 23bp on the back of some €430m of orders, including €20m of JLM interest.

“For a sub-benchmark from a rare issuer, that’s really quite good,” said a lead banker. “It was very decent execution, with good participation from not just friends and family back home, but also internationally placement.

“We revised to 25bp plus or minus 2bp after it was clear that we were comfortably done on the €300m,” he added, “but that there was some price sensitivity in the book, and there was no need to push it.”

The lead banker noted that the Mortgage Society had come not far back of the plus 20bp level at which larger compatriot Sp Mortgage Bank priced a €750m five year on 24 October, with that deal having tightened around 1bp since launch.

Møre Boligkreditt is due to launch a €250m (NOK2.56bn) no-grow five year green covered bond, having mandated LBBW, Nordea and Swedbank as bookrunners. And Sparkasse Hannover has mandated a €250m no-grow four year mortgage Pfandbrief to DekaBank, Helaba and NordLB.

In the sterling market, Barclays Bank is expected to launch a rare £500m (€573m) no-grow covered bond after a mandate announcement today. The UK issuer has mandated ABN Amro, Barclays, Commerzbank, Danske, ING, Lloyds, RBC, Santander, Standard Chartered and TD for the five year Sonia-linked issue, expected ratings Aaa/AAA/AAA.

The new covered bond will be Barclays’ first since May 2019.