DBS attracted some €3.35bn of orders to the first Singaporean euro benchmark since October 2022 today (Wednesday), a €1bn 2.5 year, with the deal enjoying more momentum than a €500m LBBW 10 year. BPCE and Santander Totta are due with 12 year and Portuguese tests tomorrow.

A syndicate banker suggested that recent central bank developments had taken some of the fantasy out of the market and potentially been a key ingredient in the differing dynamics experienced by today’s two issues.

“Clearly, there is very strong demand for these short term covered bonds and it doesn’t seem to stop,” he said. “Maybe the short end is again very interesting given the rise in yields and that fund managers are not so sure about the future path of yields.”

DBS Bank leads DBS, DZ, ING, LBBW, SG and UBS opened books with guidance of the mid-swaps plus 36bp area for a euro benchmark-sized August 2026 Singaporean covered bond, expected ratings Aaa/AAA (Moody’s/Fitch). After around an hour and 50 minutes, they reported books of over €2bn, excluding joint lead manager interest, and half an hour later, they set the spread at 29bp on the back of books above €3.25bn, including €500m of JLM interest. The size was subsequently set at €1bn on the back of books of more than €3.35bn good at re-offer, including the JLM interest and pre-reconciliation.

The last Singaporean euro benchmark was also from DBS, a €750m three year in October 2022.

“It’s a rocking success and the return of the Singaporean covered bond,” said a syndicate banker at one of the leads. “The book was actually larger than expected, with some really sizeable orders from real money alongside a lot of support from banks, so it was a well balanced order book.”

According to pre-announcement comparables circulated by the leads, DBS October 2025s and October 2026s were at 20bp and 25bp, mid, respectively, while NAB February 2026s were at 24bp and ANZ NZ July 2026s at 27bp.

“We tried to figure out what fair value could look like and based our guidance on something in the high 20s being reasonable,” said a syndicate banker at one of the leads, “and in that context, we priced it with pretty much zero or a basis point of NIP, depending on how you look at it, having moved 7bp, which is pretty much in line with what we’ve seen from other European and international issuers.

“It’s a strong jurisdiction that hasn’t been seen for a long time,” he added, “and it seems investors were craving Singaporean covereds. The rarity of the maturity also contributed to the transaction.”

Landesbank Baden-Württemberg (LBBW) leads DZ, LBBW, Natixis, Rabobank, Santander and UBS opened books with guidance of the 38bp area for a €500m no-grow February 2034 mortgage Pfandbrief, expected rating Aaa. The deal was ultimately priced at 34bp on the back of a final €1.25bn book, including €200m of JLM interest.

The pricing is 1bp wider than where Helaba issued a larger, €1.25bn 10 year public sector Pfandbrief on Tuesday of last week (30 January), after it drew some €2.15bn of demand at re-offer.

A syndicate banker at one of LBBW’s leads said that today’s outcome reflected several factors, including the recent heavy supply in the 10 year maturity and the sizing of Helaba’s deal.

“We have clearly had a lot of demand lately from momentum players,” he said, “and the question we asked ourselves was, how long will this last? I imagine those accounts got quite substantial allocations on the Helaba trade – it wasn’t seven, eight times oversubscribed like the MünchenerHyp €500m no-grow green Pfandbrief, where they were probably zeroed or got very small allocations.

“And whereas MünchenerHyp had a very good performance in secondary, accounts were telling us yesterday that they could buy Helaba at plus 34bp, so it seems they maybe took a bit too much out of the book. So we had the quality accounts today, but the momentum players were looking around for a transaction that could show more immediate performance.”

The less exuberant rates outlook may also have contributed to the lower demand, he suggested, while renewed headlines around commercial real estate for German names could also have given accounts another reason to pass on a deal with a mixed cover pool. Finally, the euro benchmark is the third from the LBBW group, he noted, with the issuer and subsidiary Berlin Hyp both having tapped the market already this year.

“The €500m no-grow definitely played in our favour,” he added, “and the syndicate flagged that 33bp could have been achieved, but the issuer felt this was a bit too aggressive and took an investor-friendly approach, which hopefully will be rewarded.”

A syndicate banker away from the leads said it remains to be seen whether the outcome of LBBW’s deal was indeed more due to local considerations, or if a degree of fatigue is setting in for covered bonds more generally.

“How things really stands may be seen tomorrow, with Totta, BPCE and maybe someone else in the market,” he added. “If the market can sustain that, then it is still not too tight and we can continue.”

Another banker said it will be particularly interesting to see how the 12 year tranche of the planned BPCE SFH transaction fares.

The French deal was announced today and launch is expected tomorrow (Thursday), with a five year tranche alongside the 12 year, and Barclays, Danske, Deutsche, Erste, LBBW, IMI-Intesa Sanpaolo, Natixis, Nordea, Rabobank and Santander as leads.

The banker suggested it should prove stronger than the German supply, thanks to a “very attractive” spread reflecting French levels and the longer maturity, anticipating IPTs some 20bp higher than LBBW.

The only 12 year issue to have been launched this year, a €1bn deal for Société Générale SFH on 23 January, had tightened from a re-offer of 50bp to 46bp, mid, according to pre-announcement comparables circulated by BPCE’s leads, while SG 1.75% May 2034s were also at 46bp. BPCE 3.375% June 2033s and 0.01% January 2036s were seen at 44bp and 43bp, respectively. BPCE March 2029s were at 36bp.

Banco Santander Totta is meanwhile set to issue the first Portuguese benchmark since September, a seven year deal also expected tomorrow. Barclays, Crédit Agricole, HSBC, Santander (global coordinator), SG and UniCredit have the mandate.

The issuer was the last Portuguese bank to sell a euro benchmark, a €850m three year, in September, after it had in April printed the first new issue of obrigações cobertas following the implementation of the EU covered bond directive, a €750m five year.