Caffil positioned itself strongly versus its compatriots today (Wednesday), with a €1bn short 10 year trade that attracted some €3.4bn of demand, allowing it to come inside where recent Crédit Agricole and CRH 10s were priced and trading. HCOB is targeting a two year ship Pfandbrief for next week.

Caisse Française de Financement Local (Caffil) leads Commerzbank, Crédit Agricole, JP Morgan, Santander and SG opened books this morning with guidance of the mid-swaps plus 54bp area for the November 2033 obligations foncières, expected ratings Aaa/AA+/AAA (Moody’s/S&P/DBRS). After around 45 minutes, the leads reported books above €1bn, and after a further update putting books above €2.75bn, they revised guidance to 48bp+/-1bp, WPIR, and set the size at a maximum of €1bn on the back of books above €3.4bn, including €250m of joint lead manager interest. The deal was ultimately sized at €1bn and priced at 47bp on the back of books above €3.2bn, including €250m of JLM interest and pre-reconciliation.

“It was an amazing result,” said a syndicate banker at one of the leads, “beyond anyone’s expectations.”

He said the issuer had been monitoring the market, in no rush to issue and flexible on tenor, but that it had become increasingly clear that a trade in the 10 year part of the curve was on the table.

“The market’s perception towards the start of the rate cut cycle coming sooner rather than later has solidified quite substantially,” he said. “Yesterday, for example, we had one of the more hawkish Fed officials being quite constructive on a rate cut.

“There was a bit of a correction in the first week of January after the year-end rally, but the direction of travel is clear and everyone is now very happy to deploy cash and lock in the high coupons levels.”

Crédit Agricole’s €1.25bn 10 year from 3 January and CRH’s €750m 10 year the following day were issued at 50bp and 49bp, respectively, and were both seen at 48bp, mid, ahead of Caffil’s short 10 year. The initial guidance for the two was the 55bp area and the lead banker said Caffil’s 54bp starting point was designed to not be too aggressive versus its compatriots, particularly with weak Chinese GDP figures overnight having led to some volatility today.

“We had also been a little sceptical on market depth after so much supply on the 10 year part of the curve,” he added, “but we had a tremendous result in terms of momentum this morning, with more than 100 accounts involved in a granular and high quality order book.

“Caffil has set a reference point tighter than its peers and made a very clear statement reflecting the agency status of the group.”

Hamburg Commercial Bank (HCOB) is planning to issue a €500m no-grow two year ship Pfandbrief, expected rating Aa3, as early as next week, following an announcement today. Commerzbank, Danske, DekaBank, JP Morgan, NordLB and UniCredit have been mandated as joint leads to arrange investor calls.

HCOB’s last benchmark was a €500m February 2028 mortgage Pfandbrief in June 2023, while its last ship Pfandbrief was a €500m three year in May 2022.