CRH cemented the reopening of the 10 year tenor yesterday (Thursday), pricing a €750m tranche as part of a €2bn dual-trancher, which combined with a €500m NordLB green Pfandbrief to take first week supply to €13.25bn, while BayernLB and Mediobanca have already teed up deals for next week.

Caisse de Refinancement de l’Habitat leads Commerzbank, Crédit Agricole, LBBW, Societe Generale and UBS went out with guidance of the mid-swaps 42bp area and 55bp area for euro benchmark-sized January 2029 and January 2034 issues, respectively. After around three hours, they capped the overall size at €2bn and set the spreads at 36bp and 49bp on the back of books above €2.3bn and above €1.45bn, excluding joint lead manager interest, for a combined €3.75bn-plus of orders. The final five year book was above €2.4bn, including €160m of JLM interest, and the final 10 year book above €1.35bn, including €100m of JLM interest, with the shorter tranche sized at €1.25bn and the longer at €750m.

CRH’s longer dated tranche made it two 10 year trades in two days – after none in the maturity since June 2023 – coming after a Crédit Agricole €1.25bn 10 year reopener on Wednesday.

“When the long end would reopen was always the big question,” said a syndicate banker involved in the 10 year supply. “More so than seven or eight years, because beyond that part of the curve, you really start losing the bank treasury bid, and need to rely more on asset managers and insurers to make up for that demand.

“We were quite certain that there would be demand from asset managers, because we’d had reverse enquiries at the back end of last year, with some investors telling us that it makes sense at absolute spread levels in the context of where the 10 years were issued. Many of them have been quite keen to load this on now, especially as there is a consensus around lower rates this year.”

While CRH’s 10 year was re-offered at 49bp, Crédit Agricole’s larger 10 year was priced at 50bp. The syndicate banker noted that while the new issue premiums on the shorter Crédit Agricole four and CRH five year tranches were just 3bp-4bp – lower than some NIPs paid towards the end of last year – the premiums of around 7bp paid on the two 10 year tranches reflected that the repricing that had occurred in the second half of 2023 out to five years had not yet been reflected in secondary levels at the long end.

“Yes, you need to pay up versus your curve, but your curve is stale and you now have access to seven to 10 years,” the banker said. “That’s a very positive message to the rest of the covered bond market, and we could see more from core issuers in eight and 10 years, and some other jurisdictions starting to look into the long end, too.

“But again, it’s above all a question of whether or not issuers are not too unhappy to pay the spread.”

Alongside the asset manager bid, demand for Crédit Agricole’s 10 year tranche was boosted to include some central bank/official institution and bank treasury buyers thanks to its green label, which helped it achieve the higher €1.25bn size, according to the banker.

“Green combined with duration clearly made a big difference,” he said. “Some bank treasuries, for example, told us that that had we done a conventional 10 year they would not have participated, but because it’s green they were keen to extend the normal duration they would look for in covered bonds.”

The green label on a NordLB €500m no-grow seven year mortgage Pfandbrief, rated Aa1, was also said to have helped the German issuer yesterday, even if the outcome was more modest than on issuance in the same part of the curve from its compatriots in the previous two days.

Leads Crédit Agricole, Deutsche, DZ, Helaba, NordLB and RBC tightened pricing on the January 2031 deal from guidance of the 42bp area to 38bp on the back of a final €800m book. A lead banker put the new issue premium at 11bp-12bp, above the 8bp-9bp premiums paid by Commerzbank, DZ Hyp and LBBW, while the re-offer spread was flat to where Commerzbank priced its €1bn seven year on Tuesday.

Yesterday’s new issues took supply to €13.25bn across three days, more than the €12.2bn across four days in the first week of 2023, which comprised 11 deals in 13 tranches versus this year’s 10 deals in 14 tranches. 2022’s record full-year supply began with a modest first week of €3.75bn from four deals across five tranches, despite also being barely shortened by official holidays.

The first deals flagged for launch next week were announced today (Friday).

Mediobanca’s mandate is the first of the year from southern Europe and is set to be the first OBG since a €750m five year for BPER Banca in October. Commerzbank, Crédit Agricole, IMI Intesa Sanpaolo, RBI and UniCredit have been mandated for a euro benchmark short five year.

A lead banker cited Intesa Sanpaolo 3.625% June 2028s as the most appropriate comparable, seeing it at plus 57bp, and saying that Mediobanca’s curve is relatively illiquid.

BayernLB is targeting a slightly shorter maturity than its compatriots this week, having mandated a long six year (July 2030) euro benchmark mortgage Pfandbrief. BayernLB, Commerzbank, Crédit Agricole, ING, KBC and UniCredit are leads.

Pre-announcement comparables circulated by the leads included BayernLB 3% May 2029s and 0.125% November 2029s at plus 20bp, mid, 0.20% May 2030s at 19bp and 0.05% April 2031s at plus 21bp. LBBW March 2031s issued on Tuesday at 30bp were seen at plus 28bp.