Bausparkasse Schwäbisch Hall and Hypo Oberösterreich successfully issued a benchmark and a sub-benchmark, respectively, yesterday and today (Wednesday), with the euro covered bond market otherwise subdued this week in the shadow of President Trump’s Greenland-related threats.

No new euro covered bond benchmarks hit the market on Monday, and the wider FIG market was quiet, after US president Donald Trump stepped up his Greenland campaign with the threat of tariffs for Europe’s most vocal opponents and the potential for EU retaliation.

Syndicate bankers said that after some time for market participants to digest the news and its implications, primary had been ready to pick up, albeit more cautiously.

And after a mandate announcement for Bausparkasse Schwäbisch Hall on Monday, leads Crédit Agricole, Commerzbank, DZ, Helaba, ING and RBI on Tuesday morning opened books for the benchmark with guidance of the mid-swaps plus 42bp area for the €500m no-grow January 2038 mortgage Pfandbrief.

After around an hour and five minutes, they reported books above €1bn, excluding joint lead manager interest, and after around two-and-a-quarter hours, the spread was set at 36bp on the back of books above €1.3bn, including €120m of JLM interest. The final book was above €970m, including the €120m of JLM interest, with 54 accounts.

While demand was already lower last week than in the bumper first week of the year, a syndicate banker at one of the leads said that Bausparkasse Schwäbisch Hall’s tenor was the main driver of the magnitude of its book.

“When you are opting for a maturity of 12 years, or anything longer than 10 years, you don’t have the fast money that drives up the order book €1bn or €2bn,” he said. “What we had was high quality and I’m a fan of such books – you could even allocate nearly everybody in full as these accounts really want the bonds. It’s different to the bigger books where some accounts can’t even stand 5% or 10% of what they ordered.

“And with the tightening of 6bp, the issuer is very happy.”

The new issue premium was 3bp-4bp, according to another lead syndicate banker. According to pre-announcement comparables circulated by the leads, Bausparkasse Schwäbisch Hall October 2035s were trading at 28bp, mid, while 2036 benchmarks issued by Commerzbank and DZ Hyp this month were quoted at 27bp and 28bp, respectively.

Banks took 41%, asset managers and fund managers 27%, insurance companies and pension funds 18%, and central banks and official institutions 14%. Germany was allocated 77%, Norway 11%, Austria 8%, France 2%, the UK 1%, and Luxembourg 1%.

“The solid demand in our order book in geopolitically turbulent times is a fitting reward of our investor base and at the same time reflects the high quality of Bausparkasse Schwäbisch Hall as a covered bond issuer,” said Michael Wuest, manager, funding and investor relations, at the German bank.

Following a mandate announcement on Tuesday, Hypo Oberösterreich (Hypo OOE) leads DekaBank, DZ, NordLB and RBI this morning opened books with guidance of the mid-swaps plus 35bp area for the €250m no-grow March 2031 mortgage Pfandbrief, expected ratings AA+ (Fitch). After around an hour and 40 minutes, they reported books above €510m, excluding JLM interest, and after around two-and-a-half hours, the spread was set at 30bp on the back of books above €640m, excluding JLMs. The final book was €585m, excluding JLM interest, with 44 accounts.

According to a syndicate banker at one of the leads, the process was run relatively quickly so that it could be wrapped up before Trump gave a much anticipated speech at the World Economic Forum in Davos this afternoon.

“You never know what will happen,” he said. “Maybe Austria is the next target.”

The banker noted that the Republic of Austria itself had acted similarly fast yesterday, pricing a €6.75bn dual-tranche trade before Trump’s speech despite having to manage a staggering €116bn order book.

He put fair value at 27bp, and hence the new issue premium at 3bp.

“We had a lot of very high quality investors, and we thought that going below the 30bp level would have the impact that a few of them might drop out, so the issuer invested 1bp to keep them involved.”

Banks were allocated 61.8%, agencies and official institutions 26.5%, asset managers 7.9%, and insurance companies and pension funds 3.8%. Germany took 47.3%, Austria 25.6%, the Nordics 12.0%, Italy 6.6%, the Benelux 5.0%, CEE 2.8%, and other 0.7%.