A €750m 10 year covered bond for Arkéa Public Sector SCF today (Monday) strongly kicked off 2026 euro benchmark supply, although a time-out for regional public holidays tomorrow means that further deals – including trades for DZ Hyp and UniCredit (HVB) – are not expected until Wednesday.

The French deal is the first euro benchmark covered bond since 25 November, when Achmea Bank sold a €500m eight year.

A syndicate banker at one of the leads said they had been approached by the issuer at short notice on Friday, in the “dead day” between New Year’s Day and the weekend.

“Luckily enough, there were some of us around to answer the phone,” he said. “We stuck our heads together and were all pretty much aligned to the fact that this should do fine, given that secondary markets have dried up completely and that anyone looking for bonds should be interested as long as it’s not anything crazy.

“So it wasn’t the greatest of risks to get this going today – bearing in mind that fixed income markets, at least, don’t seem to care about what happened in Venezuela. Whatever is happening in the world, people are pouring truckloads of money into transactions.”

Crédit Agricole, Crédit Mutel Arkéa, DZ, ING, LBBW and Natixis opened books at around 09.10 CET this morning with guidance of the mid-swaps plus 64bp area for the January 2036 euro benchmark-sized transaction, expected rating Aaa. After a little over an hour, they reported books above €2bn, excluding joint lead manager interest, and after around two-and-a-quarter hours, they set the spread at 56bp and the size at €750m on the back of books above €3.65bn, pre-reconciliation and including €215m of JLM interest. The final book was put at €3.6bn.

“At the end of the day, it was an 8bp move, so printing at fair value, for the maximum size they envisaged,” said the lead banker, “and this was all very highly appreciated. It was quite a strong reopening.”

According to pre-announcement comparables circulated by the leads, the issuer’s €500m July 2035s were trading at an i-spread of 54.5bp, mid. A DCM banker at another of the leads noted that the deal had encountered strong demand despite having a tight level relative to OATs – around 1bp through the November 2035 OAT at initial guidance.

As well as being the first euro benchmark covered bond of the year, Arkéa’s new issue is the first in the 10 year maturity since 1 October, when Bausparkasse Schwäbisch Hall issued a €500m October 2035 Pfandbrief (DZ Hyp sold a short nine year on 14 October).

“Issuers previously deemed curves just a little too steep,” said the lead syndicate banker, “and they therefore didn’t exactly appreciate the option of going for something longer. Plus you had investors being hesitant because of the outright moves in markets.

“Now it seems that people are of the opinion that, with swaps at almost 3% in 10 years and 3.5% coupons for top quality paper not being a fantasy anymore, it’s time to put your money to work also at the longer end of the curve. We saw that today on the Solvenian government bond that had a book of over €10bn and the 10 year piece of Lower Saxony’s multi-trancher – which overall had almost €18bn of orders, showing there’s a tonne of money about at the moment.”

The Epiphany holiday tomorrow (Tuesday), celebrated in parts of Germany and elsewhere, means that the market reopening will be short-lived, but two German issuers have announced deals that have been flagged for launch as soon as Wednesday, subject to market conditions, with issuance also expected to pick up more broadly.

DZ Hyp will follow Arkéa into the long end of the curve, having mandated Danske, DZ, Erste, LBBW, Natixis and Scotiabank for a 10.1 year (February 2036) mortgage Pfandbrief. And UniCredit Bank (HVB) is targeting the five year segment, with a mortgage Pfandbrief via BayernLB, Helaba, Nordea, NordLB, RBI, Scotiabank and UniCredit.

DZ Hyp’s leads circulated two pre-announcement comparables, the issuer’s €500m February 2035s at an i-spread of 25bp, mid, and €1bn May 2035s at 29bp.

Among comparables for the HVB trade were the issuer’s €1.25bn February 2030s and €1bn November 2030s at 20bp and 22bp, respectively, Commerzbank €500m October 2030s at 18bp, and DZ Hyp €1bn August 2030s and €1bn February 2032s at 15bp and 21bp.