CIF Euromortgage built a book of Eu2.3bn for a Eu1bn long 10 year benchmark yesterday (Thursday), after choosing to issue this week because of growing uncertainty. Meanwhile, BayernLB and Eurohypo executed three year jumbos with negligible interference from each other.

BNP Paribas, Deutsche Bank, DZ Bank, Natixis and Nomura priced CIF Euromortgage’s January 2022 deal at 72bp over mid-swaps.

Patrick Amat, chairman of the management board of CIF Euromortgage and chief executive officer of Caisse Centrale du Crédit Immobilier de France, told The Covered Bond Report that the issuer had decided to issue now partly because of growing uncertainty in the market, with renewed fears of a Greek debt restructuring looming over the market. The issuer launched a Eu1bn five year benchmark at the end of January and was looking to come with a second benchmark before the summer break.

Greek finance minister Giorgos Papakonstantinou

“We have uncertainty in the market and we have seen the absolute level of rates fall,” said Amat, “and we don’t know what will happen in the coming weeks. So if there is an opportunity to go ahead, we will do so rather than wait for things to improve.”

He said that the maturity was arrived at in light of the five year in January and advice from the issuer’s leads.

“We did the five year at the beginning of the year, so we were looking at a potentially issuing a seven year, but the banks told us that there would probably be an opportunity at the longer end, especially if the maturity was 2022, which some investors were specifically asking for,” he said. “The success of the issue proved them right.”

The deal was re-offered at 72bp over mid-swaps, inside an initial whisper of the mid to high 70s yesterday morning that had then been revised to guidance of 72bp-75bp over.

“We made the decision not to go above Eu1bn as we had no need for more,” said Amat, “and given the book it was possible to price the issue at 72bp. It went very, very well.”

As pricing references, the leads looked at CIF Euromortgage’s June 2020 paper trading at 68bp over mid-swaps and a Compagnie de Financement Foncier 10 year sold at 78bp over in April.

Insurance companies took 18% of the paper, while banks were allocated 40%, funds 27%, central banks 6%, retail banks 5% and others 4%. France took 28%, Germany 22%, 18% Switzerland, Asia 10%, the Benelux 10%, Scandinavia 5%, UK 5% and others 2%.

Eurohypo built a Eu2.5bn order book on its Eu1.5bn three year trade at 33bp over mid-swaps, via leads Commerzbank, DZ Bank, HSBC, Natixis and UBS. The books were open for approximately 90 minutes.

According to a syndicate official at one of the leads, the pricing was arrived at with a recent March 2014 Eurohypo tap at 28bp in mind. A few basis points were then added to the curve, he said.

“There was a slight overlap in the market with the two deals”, he added, referring to the BayernLB issue, “to the extent both were German and both were three years, but we felt there was room for both of us, and there was.”

One banker said the issuer must have been very happy with the deal.

“It has not been easy for them recently,” he said. “They have not had a deal of that quality, of that oversubscription for some time.

A banker away from the leads called the trade a “no-brainer” and “very good”.

Germany was a key driver on the trade, according to the lead banker, taking 53%, while Scandinavia took 19%, France 7%, the UK 4%, Asia 3%, Italy 3%, Austria/Switzerland 3%, and others 3%. Banks were allocated 42%, funds 24%, central banks 23%, insurance companies 4%, corporations 3%, and others 4%.

BayernLB sold its Eu1.25bn three year public sector Pfandbrief at 6bp over mid-swaps through leads BayernLB, Credit Suisse, NordLB, SG and UniCredit. A syndicate official at one of the leads said the order book totalled Eu1.8bn, with over 100 accounts.

“There was competing supply in the market” said the syndicate official, referring to the three year Eurohypo trade. “But we were in the market early and it was a really short bookbuilding period, with books only open from 0900 CET to 1100 CET.

“It didn’t really noticeably influence our deal,” he added. “The Eurohypo spread level was far higher, so it’s a different asset class.”

A syndicate official away from the leads said that the pricing was attractive for investors.

“It was a nice success,” he said. “It was cheap, and that’s probably what made it a success.”

Banks took 36%, insurance companies and funds 33%, central banks 10%, corporations 3%, and savings banks 18%. Germany was allocated 61%, Switzerland and Austria 18%, Luxembourg and the Netherlands 5%, the UK 1%, France 2%, other Europe 3%, Asia 8%, and others 2%.