Banco Santander Totta sold the largest and longest Portuguese benchmark since 2017 today (Thursday), while a BPCE dual-trancher, including a successful 12 year, attracted one of the biggest books of the year, showing the primary covered bond market to remain in good shape.

Santander Totta’s deal, announced yesterday (Wednesday), is the first euro benchmark covered bond from Portugal since it issued a €850m three year in September.

Leads Barclays, Crédit Agricole, HSBC, Santander, SG and UniCredit this morning opened books with guidance of the mid-swaps plus 73bp area for the euro benchmark-sized February 2031 obrigações cobertas, expected ratings Aaa/AA-/AA (Moody’s/Fitch/DBRS). After around two-and-a-quarter hours, they reported books above €1.5bn, and after around three hours, they set the spread at 67bp on the back of books above €2.3bn. The size was subsequently set at €1bn, with orders above €2.6bn, pre-reconciliation and excluding joint lead manager interest, and the final book was above €2.5bn, including €165m of JLM interest.

The new issue is the biggest and longest-dated Portuguese benchmark since 2017, when the bank sold a €1bn 10 year.

“It was fantastic,” said a syndicate banker at one of the leads, “probably better than expected. The deal was highly oversubscribed, with a high quality book featuring all the relevant players you want to see and a lot of real money.

“There’s always a degree of caution on projects like this because of the geography – Cajamar last month wasn’t the easiest and we saw similar names from Spain or Portugal last year that were tricky – so to have a €1bn seven year from Totta doing so well, it just really underlines how positive sentiment is for a Portuguese national champion when some German names, for example, aren’t doing so well.”

He saw the new issue premium as being 2bp and put this at the lower end of recent prints.

The new issue is the first from Portugal since Moody’s upgraded the covered bonds of Santander Totta and several of its compatriots to triple-A.

Following a mandate announcement yesterday, BPCE SFH leads Barclays, Danske, Deutsche, Erste, IMI-Intesa Sanpaolo, LBBW, Natixis, Nordea, Rabobank and Santander today opened books with guidance of the 44bp area and 56bp area for euro benchmark-sized February 2029 and February 2036 issues, respectively, expected ratings Aaa/AAA (Moody’s/S&P). After around an hour and 10 minutes, they reported combined books above €3bn, excluding JLM interest and skewed to the five year, and after around three hours and 10 minutes, the spreads were set at 36bp and 51bp for a maximum combined size of €2.25bn on the back of combined books above €5bn, excluding JLM interest and still skewed to the shorter tranche. The five year tranche was subsequently sized at €1.5bn, with orders above €3.6bn, and the 12 year at €750m versus a book above €1.6bn.

The combined order book is one of the biggest of 2024, but a syndicate banker at one of the leads said this was not a major surprise.

“BPCE is clearly a prolific issuer and it is not so long since their last trade, and you always wonder how the take-up will be this time around,” he said, “but it was very strong again.”

The French issuer sold €1bn three year and €1.5bn seven year covered bonds on 8 January.

“Five years is completely uncontroversial and still a sweet spot,” added the lead banker. “And while the backdrop might not be as strong as when SG issued its 12 year – things have been a bit more fragile around the edges post-FOMC – we still got a solid €1.7bn or so of demand.

“So a French bank has again demonstrated that the duration bid is still there, even if not necessarily for everyone.”

ING Belgium joined the Portuguese and French issuers in the market this morning.

Leads BayernLB, Commerzbank, DZ, ING, NordLB, Nykredit and SG opened books with guidance of the mid-swaps plus 45bp area for the euro benchmark-sized February 2031 mortgage Pandbrieven, expected ratings Aaa/AAA (Moody’s/Fitch). After around an hour and 40 minutes, they reported books above €1.25bn, excluding joint lead manager interest, and after around two hours and 35 minutes, they set the spread at 38bp on the back of books above €1.65bn, including €105m of JLM interest. The size was subsequently set at €1bn, with orders above €1.5bn, and the final book was above €1.45bn, including the €105m of JLM interest.

ING’s trade was priced flat to where compatriot Belfius issued a €500m deal in the same maturity on the back of a €1.9bn final book on Thursday, with that deal quoted at 37bp, mid, according to pre-announcement comparables circulated by ING’s leads.

“This was a bit of a different animal,” said a syndicate banker at one of the leads, “in terms of the size they normally take out of the market being larger, plus the fact that they belong to one of the strongest European financial conglomerates, of course.

“And in the end, this was reflected in the way the deal worked – they wanted to solve for their typical €1bn minimum, but not to be outdone by Belfius in terms of final spread. So this ticked their boxes.”

He said that while the deal size was relatively large versus the book size, the quality of the order book and strength of the name supported this.

Other comparables circulated by the leads included ING Belgium 0.01% February 2030s at 33bp, and January 2032s issued by parent ING last month at 32bp.