A €600m 20 year de Volksbank trade – the first post-summer test of the long end – surprised to the upside today (Wednesday), attracting over €1.9bn of orders, in another busy day in euros, with Equitable and Hypo Oberösterreich hitting the euro market with firsts, and NordLB mandating a green debut.

After a mandate announcement yesterday (Tuesday), de Volksbank leads Commerzbank, Goldman Sachs, LBBW, NatWest and Rabobank opened books this morning with guidance of the mid-swaps plus 10bp area for its €600m no-grow September 2041 issue, with expected ratings of Aaa/AAA (Moody’s/Fitch). After about one and a half hours, they reported books above €1bn, excluding joint lead manager interest. After two hours and 10 minutes, guidance was revised to plus 7bp+/-1bp, will price in range, on the back of books above €1.1bn, excluding JLM interest. After two hours and 40 minutes, the spread was fixed at 6bp on the back of orders exceeding €1.9bn, pre-reconciliation, excluding JLM interest.

A syndicate banker at one of the leads said the deal went surprisingly well.

“The feedback we received yesterday for this transaction and for this maturity was a bit mixed,” he said. “In the end, it went very well. But we were all a bit curious about how a 20 year would go.”

The lead banker put fair value in the context of 5bp, implying new issue premium of around 1bp. A syndicate banker away from the leads saw the concession closer to 2bp, but agreed the outcome was a success, citing the magnitude of the order book.

“We were pleased to see this deal coming and it went down well,” he said. “There have not been many long dated deals – what we have seen is a little more in the belly of the curve, between five and eight years.”

Canada’s Equitable Bank launched its debut covered bond today, a three year euro sub-benchmark, after a mandate announcement on Monday of last week (30 August). Leads Barclays, DZ, LBBW, Scotiabank (passive) and TD Securities went out this morning with IPTs of the mid-swaps plus low 20s area for a €300m expected size September 2024 issue, with ratings of AA/AA (Fitch/DBRS).

After an hour and 20 minutes, books were reported above €500m, including €55m of JLM interest, and after around an hour and 50 minutes, the size was set at €350m, on the back of books above €750m, with JLM interest unchanged, with guidance to the 18bp area. After two hours and 35 minutes, books above €825m were reported, including unchanged JLM interest, and guidance was revised again to plus 16bp+/-1bp, WPIR. After three hours, the spread was set at 15bp on the back of books above €1bn, including the JLM interest.

A lead banker said the issue had gone very well, given the €1bn book relative to the €350m size.

He said the low 20s initial guidance was on the generous side in light of investor feedback received during premarketing.

“Most of the accounts said that they needed a pick-up versus the first row of Canadian issuers and that was in the high teens,” he said. “In the end we saw great momentum and high quality orders in the book with little sensitivity, so we were able to drive this down and print at plus 15bp.”

Compared to the bigger Canadian banks, the lead banker said the final pick-up was around 12bp-13bp.

“It’s mainly due to the fact that the issuer is not really well-known, it is an inaugural issuance, and they just have a AA rating,” he said, “so all of that adds up to this pick-up.”

A syndicate banker away from the leads agreed on the size of the pick-up, and said it was at the upper end of differentials between issuers in other jurisdictions.

“I certainly would have expected to see a pretty decent differential, but that perhaps is at the upper band of that which one might have expected,” he said.

“Not to say that that doesn’t make it a very successful transaction,” he added. “It was still an impressive trade – managing to get something sub-benchmark in the pretty efficient three year part of the curve where you’re probably looking to establish your name and then hope that your spread improves over the course of time – it makes plenty of sense.”

Hypo Oberösterreich also hit the market today, following a mandate announcement last Thursday, with a debut green covered bond. Leads Erste, Helaba, LBBW and UniCredit went out this morning with guidance of the mid-swaps plus 8bp area for the September 2028 issue, rated AA+ by S&P. After an hour and a half, they reported books at €425m, including €50m JLM interest. After two hours, books above €490m were reported, including €65m JLM interest and guidance was revised to plus 5bp+/-1bp, WPIR. After four hours and 10 minutes, books at re-offer were reported as €410m, with unchanged JLM interest, and the spread was set at 4bp.

A lead syndicate banker noted that, being almost twice oversubscribed at peak, the deal was a success for such an infrequent and low profile issuer.

“Given the maturity of seven years, maybe also the green feature, and the very constructive market environment, this trade went very, very well,” he said.

NordLB is planning an inaugural green Pfandbrief, it said today, with ABN Amro, Natixis, NatWest, NordLB, Santander and UniCredit as joint leads. Investor calls are scheduled for Monday and Tuesday, after which a five to seven year mortgage Pfandbrief will follow, subject to market conditions.

Deutsche Hypo issued green Pfandbriefe before being merged into NordLB on 1 July and their cover pools combined.