Banca Popolare dell’Emilia Romagna and HYPO NOE represented the benchmark covered bond market on a busy day for new issuance across asset classes today (Tuesday) as the primary market in euros showed itself undisturbed by US debt ceiling negotiations.

Other issuers out with deals today include Santander Consumer Finance in senior unsecured and the European Stability Mechanism (ESM), which is launching its inaugural issue, although this is only a snippet of the new debt capital market supply being offered today.

In covered bonds Italy’s Banca Popolare dell’Emilia Romagna (BPER) is making its benchmark debut, while Austria’s HYPO NOE Gruppe Bank is selling its first deal in just over a year.

“The primary market is open for business and it’s smart of issuers to get deals done,” said a syndicate official, noting that next week could become a “last chance saloon” if the US Congress does not show signs of reaching an agreement to increase the US debt ceiling.

US lawmakers have until 17 October to raise the ceiling to avoid a default, and many market participants are assuming that an agreement will ultimately be reached by the deadline.

Another syndicate banker said that he expects the US negotiations will produce an agreement and suggested the rush to the primary market was somewhat unnecessary in this context although issuers are meeting with plenty of demand.

“The primary market is completely unaffected by what’s going on in the US,” he said, “which is being played out in the secondary market, in equities. It’s not really bothering the bond market.”

However, there is only one entry in the public deal pipeline in covered bonds, a mandate for Italy’s Mediobanca that could be executed this week after the issuer recently finished a roadshow. The issuer is understood to still have some investor calls lined up, and may wish to wait until after Italy has tapped the market with a syndicated seven year benchmark that is expected to be launched tomorrow (Wednesday). Bank of Austria was mentioned as a new issue candidate although not for the immediate future, while a syndicate banker said that the launch of ESM’s deal could clear the way for low beta covered bond issuers that may not have wanted to compete directly with supply from the SSA issuer.

BPER leads Citi, Mediobanca, RBS, Société Générale and UBS will price a Eu750m five year covered bond at 215bp over mid-swaps after having built an order book of around Eu1.65bn. The Italian bank has issued covered bonds before but retained them, and today’s transaction is its first benchmark covered bond.

The obbligazioni bancarie garantite (OBG) issue was initially marketed at the 225bp over area before guidance was set at the 220bp over area.

It is the second Italian benchmark covered bond of the week, coming after UBI Banca yesterday (Monday) attracted some Eu2.1bn of orders for a Eu1.25bn seven year OBG at 148bp over.

A syndicate banker on BPER’s deal said that the issuer decided to accelerate its issuance plans after receiving strong interest on the back of its roadshow and in light of the success of UBI’s transaction.

A syndicate official away from the leads said that BPER’s OBG is coming some 30bp back of Italian government bonds, which seemed reasonable given for an offering from a lower tier credit.

“And the market is a bit weaker than yesterday, so it’s not a bad result,” he said.

A banker involved in BPER’s deal said that it went very well, with the Eu750m size at the upper end of the targeted range, around half of the orders for the OBG coming from outside Italy, and the premium to BTPs ending up smaller than 40bp.

He also noted that the deal appears to be the lowest rated Italian benchmark covered bond placed in the market, and from a sub-investment grade issuer.

BPER’s covered bonds are expected to be rated Baa2 by Moody’s, versus an A2 Moody’s rating for UBI’s OBGs, for example. BPER is rated BB- by Standard & Poor’s, and BB+ by Fitch.

HYPO NOE Gruppe Bank is pricing a Eu500m no-grow seven year public sector backed issue at 13bp over mid-swaps via leads BNP Paribas, Commerzbank, Crédit Agricole, LBBW and RBS. More than Eu1bn of orders are said to have been gathered. Guidance was set at the 15bp over area.

The deal is the Austrian issuer’s first since September last year, when it sold a Eu500m seven year at 32bp over.

A syndicate official away from today’s deal said the pricing looked appropriate from a relative value perspective, with HYPO NOE offering a small pick-up over its peer Raiffeisenlandesbank Niederösterreich-Wien. RLB NOe-Wien sold a Eu500m seven year mortgage issue at 10bp over on 25 September and the bond is trading at 9bp over bid, according to the syndicate banker.