Banco BPM issued a near twice-subscribed €750m six year OBG with a modest new issue premium today (Wednesday), following Banco Popolare di Sondrio in adding to a string of successful Italian issuance this year. Cajamar is meanwhile due with the first cédulas of 2024.

Following a mandate announcement yesterday (Tuesday), Banco BPM leads Banca Akros, Barclays, BBVA, Crédit Agricole, LBBW, RBI and UniCredit opened books this morning with guidance of the mid-swaps plus 83bp area for a euro benchmark-sized January 2030 OBG, expected rating Aa3. After around two-and-three-quarter hours they set the spread at 77bp and the size at €750m on the back of books above €1.4bn, including €70m of joint lead manager interest.

A lead banker said the book and pricing represented a strong result for the issuer, particularly given more challenging market conditions.

“Today was quite a soft one,” he said. “Asian equities were down 4% this morning and everything was red, and was still quite shaky through the day. But we are talking about around 5bp of new issue concession, which is bang in the middle of what OBGs have been paying, and the €1.4bn book is comparable with Mediobanca and higher than Sondrio.

“We took the softness into account and adjusted the IPTs slightly versus what we had initially considered, but after the 6bp tightening we in the end tightened to what we had originally hoped to achieve. Overall, it was a very nicely done trade.”

The issuer’s 3.75% June 2028s were seen at 68bp, among pre-announcement comparables circulated by the leads, Credem social 3.25% April 2029s, issued last week, at 64bp, UniCredit 3.50% July 2030s at 69bp, and Crédit Agricole Italia 3.50% January 2030s at 72bp (all Aa3). BTPs were at 73bp-74bp in that part of the curve.

BPM’s issue comes after Banca Popolare di Sondrio issued a €500m five-and-a-half year OBG on Monday, after a mandate announcement on Friday. Leads IMI Intesa Sanpaolo, LBBW, RBI, Santander, SG and UniCredit priced the July 2029 deal, expected rating AA (Fitch), at 77bp on the back of books above €950m, including €110m of JLM interest, after having gone out with initial guidance of the 80bp area.

According to pre-announcement comparables circulated on Friday, the issuer’s October 2028s were seen at 77bp, mid, with BPER Banca October 2028s at 72bp, BPM’s June 2028s at 68bp (as above), and Credem’s social April 2029s at 63bp (all Aa3). Some analysts deemed the new issue concession negligible, with one analyst further noting that the re-offer spread was inside the 81bp paid by Banco Popolare di Sondrio on a straight five year in October.

A syndicate banker away from the leads put the new issue premium closer to 3bp, with initial guidance 6bp back from fair value. He said this relatively aggressive approach probably contributed to the sub-€1bn book, but that the deal was nevertheless comfortably oversubscribed and had fared well in the secondary market. He further noted that secondary spreads had in the past fortnight converged with the levels of new issuance, contributing to the diminishment of new issue premiums.

The two Italian deals take year-to-date OBG supply to five new issues totalling €3bn, with national champions Intesa Sanpaolo and UniCredit yet to tap the market.

“Now it’s time to see if the Italian success can be replicated for Cajamar,” said a syndicate banker.

Cajamar Caja Rural has mandated what is set to be the first Spanish benchmark covered bond of the year, having mandated a five-and-a-half year cédulas hipotecarias trade to BBVA, Crédit Agricole, Deutsche, Nomura and Santander.

According to pre-announcement comparables, Cajamar 3.375% February 2028s were seen at 61bp, mid, Caja Rural de Navarra 0.75% February 2029s at 50bp, Sabadell 1.75% May 2029s at 63bp, Abanca 0.75% May 2029s at 45bp, and UniCaja 0.25% September 2029s at 60bp, while 3.5% May 2029 Bonos were at 22bp.

Cajamar’s last euro benchmark was a €750m five year in February 2023. The last euro benchmark covered bond from Spain was a €500m three year for Deutsche Bank Español on 14 November, priced at mid-swaps plus 40bp.