The mandate for Caffil’s 10 year benchmark was announced at around 12.00 CET on Thursday, just as BPCE was wrapping up a €1.5bn issue in the same tenor that had also attracted one of the largest ever order books, at some €8.6bn. That in itself was the third of four French 10 year transactions last week, including Caffil’s, after Arkéa Public Sector SCF had reopened euro benchmark covered bond issuance on the Monday with a €750m deal that attracted over €3.6bn of orders, and CRH had on Wednesday generated a €5.2bn-plus book for a €500m trade.

“Caffil is typically a long-dated player, and we knew already in December that the appetite for duration was likely to develop well, given the higher interest rate environment we have observed since November,” said Veillas, “and especially for French covereds, given the stronger relative value versus other jurisdictions.

“And that’s what we saw crystalise on all four 10 year transactions that came out of France last week.”

On Friday morning, leads BNP Paribas, Crédit Agricole, JP Morgan, Natixis and NordLB opened books with guidance of the mid-swaps plus 62bp area for a euro benchmark-sized transaction, expected ratings Aaa/AAA (Moody’s/DBRS).

After around 40 minutes, they reported books above EUR4.2bn, including EUR525m of joint lead manager interest, then after around an hour and a half, they set the spread at 51bp and the size at EUR1bn on the back of books above EUR8.7bn, pre-reconciliation and including EUR575m of JLM interest.

The final order book reached €10.1bn, the biggest ever for a euro covered bond, with 180 investors participating. The previous largest such book is believed to have been EUR9.2bn for a Deutsche Postbank five year public sector Pfandbrief in July 2009.

“The depth of demand was astonishing,” said Veillas.

Indeed, while the primary market can sometimes lost steam in the face of supply, the opposite occurred last week.

“Each day momentum seemed to increase in terms of the speed of bookbuilding and the size of the book,” said Veillas. “The first update, for example, was progressively earlier and stronger. So in this environment there was no concern about coming with the fourth 10 year tranche, because the level of demand was so high that it was strong enough for everyone.

“Investors very quickly understood that French covereds in this 10 year bucket is the precise segment to insist on if they want to lock in decent performance at the beginning of 2026.”

The four French 10 year trades were also priced at progressively tighter spreads: after Arkéa came at 56bp, CRH priced at 54bp, BPCE at 52bp and finally Caffil at 51bp.

“The syndicate had an expression for that,” said Veillas, “last mover advantage – when the market is so strong, it’s possible that coming last is an advantage, and we profited from that.”

At the time books were opened on Friday, Crédit Mutuel Arkéa’s new issue was seen at 52bp, mid, and both CRH’s and BPCE’s at 48bp, with Arkéa 1bp tighter than when Caffil’s mandate was announced the previous day and CRH 2bp tighter.

Caffil’s pricing was equivalent to 16bp through OATs, a record for the issuer.

Vincent Hoarau, global head of FIG syndicate at Crédit Agricole CIB, said the new issue played into the dynamics driving the covered bond market at the start of the year.

“The covered bond market is in full repricing mode,” he said. “More and more credit investors like the total return the asset class offers, while the track record of the segment in terms of resilience has been amazing throughout 2025. Unsecured senior spreads are trading at long time lows, playing positively for the asset class in terms of relative value. Meanwhile govies are no longer perceived as the risk-free benchmark.

“The liquidity-carry combo is going to continue to support spreads in secured funding,” added Hoarau. “The same for redemptions: in secured and unsecured preferred, they are 50% higher this month versus January 2025. So the compression mode is set to continue – particularly in a French segment that is still trading wide after a relatively difficult year.”

Some 180 investors participated in Caffil’s transaction, a record for the issuer as well as the overall Sfil group.

“One factor in the success of the deal was huge demand from the Nordics, with more than 20% of the book, and close to 30% for southern Europe,” said Ralf Berninger, head of investor relations and sustainability at Sfil. “That’s much higher than what we usually have from the Nordic region and southern Europe.”

The Nordics were allocated 23%, Spain and Portugal 20%, Germany and Austria 20%, the UK 8%, Italy 7%, Switzerland 5%, France 4%, the Benelux 4%, Ireland 4%, central Europe 3%, Asia 1%, and others 1%. Banks took 46%, investment managers 34%, insurance companies 12%, and central banks and official institutions 8%.

In spite of the huge level of oversubscription, Caffil did not increase its deal to the larger €1.25bn-€1.5bn sizes it has reached in recent years.

“We raised a decent amount of pre-funding in November and December, especially in longer maturities,” said Veillas, “so we were in a very comfortable position coming into 2026. We were therefore very happy with €1bn and no more when targeting 10 years.

“We also have the capacity later in the year to be reactive with taps of our outstanding bonds.”

Caffil intends to issue between €6bn and €8bn in covered bonds in its 2026 funding programme, with parent Sfil targeting €1bn-€3bn.

“This transaction marks a great start to the year,” said Olivier Eudes, head of ALM and financial markets. “With a total funding plan between €7bn and €9bn for 2026, we will continue to be active both in the SSA and in the covered bond market.”

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.

According to Gonzague Veillas, head of funding and treasury at Caisse Française de Financement Local (Caffil) parent Sfil, said the window for the new issue on Monday of last week (20 October) materialised after it became clear the previous Wednesday (15 October) that reappointed French prime minister Sébastien Lecornu would survive impending no confidence votes.

“We have been very pragmatic,” he told The Covered Bond Report, “meaning that we have been paying close attention to market developments around French political risk. On the Wednesday, we clearly saw strong relief in OATs once the market was convinced that the risk of a dissolution was fading away, which signalled to us that a window could open for a Caffil trade.

“It was something that would give comfort to our investors to come into a French covered bond – in my view, it does not have any impact on pricing, but simply provide the context for a more positive reception for our trade.”

S&P then downgraded France from AA- to A+ late Friday (17 October). However, the move only led to the deal being announced half an hour later on the Monday morning, as Caffil and its leads monitored the market’s reaction.

“The downgrade itself was not a surprise,” said Veillas, “just the timing. But what we clearly saw on the morning of the 20th was that the market had already been pricing it in – we saw a 2bp widening of OATs versus Bunds and swaps, but that quickly stabilised and reversed in the course of the morning.

“Caffil – as a covered bond issuer – follows a different market dynamic than French sovereign risk,” he added.

Leads BBVA, Citi, HSBC, LBBW, Natixis and SG opened books around 9.30am CET with guidance of the mid-swaps plus 65bp area for a euro benchmark-sized May 2033 transaction, expected ratings Aaa/AAA (Moody’s/DBRS). After around an hour and 10 minutes, the leads reported books above €1.6bn, including €275m of joint lead manager interest, and after around an hour and three-quarters, the spread was fixed at 61bp, with the size still to be determined, on the back of books above €2.45bn. The size was then set at €1.25bn and the final book was around €4.2bn, including €290m of JLM interest and 105 accounts.

“We are very happy with the transaction,” said Veillas. “Clearly the objective was to complete our 2025 funding programme in a very positive tone, and this was achieved, with the strong response from investors and high level of oversubscription.”

The new issue premium was put at 3bp – among pre-announcement comparables circulated by the leads, Caffil’s July 2033s were quoted at 58bp, mid. The guidance offered a pick-up of 7bp over OATs, while the final pricing was 1bp over.

Investment managers were allocated 40%, banks 37%, central banks and official institutions 16%, and insurance companies 7%. Germany and Austria took 20%, France 15%, the Nordics 13%, the UK 12%, Italy 10%, Iberia 8%, Middle East and Africa 8%, the Benelux 6%, Asia 3%, central Europe 2%, Switzerland 2%, and others 1%.

The new issue is Caffil’s fifth benchmark covered bond of the year. New euro benchmark covered bonds have contributed €4.75bn of Caffil’s €6.1bn total for the year, with the balance made up of private placements and taps.

“Our investors and dealers know that Caffil is a regular issuer in tap format,” said Veillas, “so when there is a need for liquidity, we have the capacity to tap.

“What we have done for the first time this year,” he added, “is to tap social and green bonds.”

Caffil tapped green and social benchmarks it issued this year for €250m and €150m, respectively, in September and October, for example. The issuer has also been offering private placements in green format. Veillas noted that the issuer has delivered on its commitment to raising at least one-third of its volumes in green and social formats.

In parallel, the group has been expanding the scope of green and social use of proceeds of its issuance.

“In addition to the hospitals we initially financed on the social side and local government investments on the green side, we now include export projects,” said Ralf Berninger, head of investor relations and sustainability at Sfil. “On the green side, for example, we have financed investments in renewable energy and also a very big public transportation project in Africa, and on the social side investments including electricity grids in Africa.”

With €2.5bn of issuance from Sfil in 2025, the group’s total funding programme for the year has been €8.6bn. Next year’s funding targets are set to be released soon.

“I don’t expect any major changes in the total,” said Veillas. “We will remain a regular issuer overall, and especially Caffil in the euro covered bond market with similar volumes.”

He noted that while last week’s transaction completes the group’s 2025 long term funding programme, Caffil will consider non-benchmark pre-financing opportunities – i.e. private placements and taps – between now and year-end.

The new transactions were smoothly executed, tightened 6bp-8bp, with issuers happy to take greater size.

“Everything has still been around five years, which is a sweet-spot for investors,” said a syndicate banker involved in today’s supply. “Scarcity played in favour of the Canadian and Swedish projects, but even a relatively small, private equity-owned French name worked very well in this environment.

“So everything is working very well, nobody is overpaying, and they have access to size despite paying very little NIP. That should push people to look at the market.”

Another banker said the market has rediscovered its resilience very quickly.

“The tailwind just comes from the fact that the market has gotten to grips with most of the nonsense coming out of the White House, and they haven’t produced anything significantly new over the last couple of days, at least,” he said. “This allows new transactions to work again under what you could call the new normal.

“So let’s make use of this period of relative calmness. This, I think, is how many potential issuers may be looking at things – you don’t know when the next round of madness is going to be triggered.”

Indeed, further benchmark supply is deemed possible tomorrow (Wednesday) ahead of 1 May public holidays across Europe. However, only a mandate for a sub-benchmark covered bond had been officially announced today: Oberösterreichische Landesbank (HYPO Oberösterreich) is set to launch a €250m no-grow short seven year (March 2032) mortgage Pfandbrief via Danske, Erste, LBBW and Helaba.

Skandinaviska Enskilda Banken(SEB) leads Commerzbank, Crédit Agricole, ING, Natixis and SEB opened books this morning with guidance of the mid-swaps plus 38bp area for a euro benchmark-sized May 2030 covered bond, expected rating Aaa. After around an hour, the leads reported books above €1.75bn, including €75m of joint lead manager interest, and after around two hours and 10 minutes, they set the spread at 32bp and the size at €1bn (Skr11bn) on the back of books above €2bn. The final book was above €1.8bn, including the €75m of JLM interest.

“There has been a fair bit out of the Nordics,” said a syndicate banker at one of the leads, “but there’s been limited supply out of Sweden and nothing from SEB since 2023, meaning there were unused lines for the name.”

SEB’s last euro benchmark was a €1.5bn long five year in February 2023.

“There could have been a bit of an impact from the CIBC on the SEB, because, after all, it was 10bp cheaper for something that is not too far from SEB,” added the lead banker, “but we were testing the low 30s, which is as tight as things came pre-tariffs, and still had extremely strong execution.”

He noted that the spread was inside a €1bn 5.25 year printed by OP Mortgage Bank, at 33bp, on 2 April, before “Liberation Day”, while close to the 30bp level achieved by DNB Boligkreditt with a €1.5bn 4.5 year on 20 March. Pre-announcement comparables circulated by the leads put the Norwegian paper was at 31bp, while SCBC February 2030s – printed at 34bp on 17 February – and LF Hypotek March 2030s issued last year were at 32bp, implying a new issue premium of up to 1bp, according to syndicate bankers at and away from the leads.

“When you put everything together,” added the lead banker, “the issuer didn’t pay one more bip than what they would have if they had done the trade earlier. And the quality of the order book and convincing outcome are a testament to the SEB name.”

Canadian Imperial Bank of Commerce (CIBC) leads CIBC, Commerzbank, DZ, HSBC, ING and Natixis opened books with guidance of the 48bp area for a euro benchmark-sized May 2030 covered bond, expected ratings Aaa/AAA (Moody’s/Fitch). After around an hour and a quarter, they reported books above €2bn, including €125m of JLM interest, and after around two-and-a-half hours, the spread was set at 41bp and the size at €1.25bn (C$1.97bn) on the back of books above €3bn.

“If you look at how the deal developed and how it ended, it was a very successful transaction,” said a syndicate banker at one of the leads. “Moving 7bp from start to finish, with no intermediate step, the €1.25bn size – which I understand was the maximum they could do – and they got the tightest possible price, with zero concession.”

The leads put fair value at 41bp based on the secondary levels of CIBC’s last euro benchmark, a €1.25bn five year issued in September 2024, and the last Canadian euro benchmark, a €1.5bn five year issued by Royal Bank of Canada at 40bp in January.

After a mandate announcement yesterday (Monday), CCF SFH leads Crédit Agricole, Helaba, Natixis, SG and UniCredit went out with guidance of the 63bp area for an expected €500m six year covered bond, expected rating Aaa. After around an hour and 25 minutes, the leads reported books above €1.5bn, including €175m of JLM interest, and after around two-and-a-half hours, the spread was set at 56bp and the size at €750m on the back of books above €2bn, including €200m of JLM interest. The final book was above €1.7bn.

A lead banker said that, with pricing coming in around fair value, CCF took more size than expected.

“French covered bond spreads are still relatively elevated,” he added. “It’s quite telling that Iccrea yesterday achieved a better price than CCF.”

The Italian bank yesterday issued the first euro benchmark covered bond in almost two weeks, since a €1.25bn long five year for BPCE SFH on 15 April.

Iccrea leads Barclays, BBVA, Crédit Agricole, Helaba, UBS and UniCredit priced the €600m 5.5 year OBG, expected rating Aa3, at 52bp, following guidance of the 60bp area. The deal was upsized from €500m on the back of a peak book above €1.8bn and final book of around €1.15bn.

A lead banker putting the NIP at 2bp, while the pricing was some 9bp inside BTPs.

The new issue comes after Caffil restarted euro benchmark covered bond issuance last Thursday in the wake of weakness and volatility sparked by the Trump administration’s chaotic tariff onslaught, selling a €1bn green 10 year, with Caisse de Refinancement de l’Habitat (CRH) the only other issuer to have braved the primary market, issuing a €750m eight year on Friday.

BPCE SFH leads BBVA, Crédit Agricole, Danske, Natixis, NordLB and Rabobank opened books this morning with guidance of the mid-swaps plus 56bp area for a euro benchmark-sized July 2030 deal, expected ratings Aaa/AAA (Moody’s/S&P). After around an hour, they reported books above €2bn, and after around an hour and 50 minutes, the spread was set at 50bp and the size at €1.25bn on the back of books above €3.8bn, including €265m of joint lead manager interest. The final book was above €4.3bn, including JLM interest.

“From the outset and judging by all the relevant parameters, it was definitely the most successful of the three since Thursday,” said a syndicate banker away from the leads, “with the level of oversubscription particularly convincing. The book grew right up to the end, with another billion after the final terms were set.

“If you compare it to the other two French, it is basically the maturity doing the trick – fives are the easier sell versus eights and 10s.”

A syndicate banker at one of the leads agreed that the maturity was key to the deal’s success.

“The name is good,” he said, “but the tenor really helped. We knew that bank treasuries would be keener on this one than the longer dated paper, and that with the five year maturity and for a frequent issuer like BPCE this was by no means any kind of ‘test’, but it exceeded expectations with more than €4bn in the book.

“It’s the biggest book for a single-tranche deal in a couple of months.”

While a variety of financial institutions have been monitoring different parts of the secured and unsecured markets and generally declining to proceed after go/no-go calls, the market was considered sufficiently constructive for launch this morning, according to the lead banker – “not super-strong, but not falling out of bed, either.”

The leads put fair value at 47bp, implying a new issue premium of around 3bp.

“Could they have gone a basis point lower? I think they could, without jeopardising too much of the book, but they had this size and kind of target level in mind,” said the lead banker. “BPCE is a frequent player in the market, not known for squeezing the last basis point, and now everyone walks away from the trade with a good feeling.

“It has a big programme – even if less than last year – and will be back in the euro market later this year.”

The euro benchmark is only BPCE’s second of the year, following a €1.25bn long seven year in January, priced at mid-swaps plus 65bp. Its activity is down on last year, when it raised €4.75bn in the first two months of the year in two dual-tranche transactions, as part of an aggregate €7.25bn across 2024. Group member CFF has meanwhile raised €1.25bn year-to-date, in a dual-tranche deal in February, compared to €2bn by this time last year and €5bn across the whole of 2024.

Syndicate bankers said that, with many issuers in or entering blackouts, and the market still considered vulnerable to headlines, supply could remain subdued.

“If you’ve got €6bn or so to do over the year, you can’t be overly picky and if you’ve got a decent chance of getting a deal going, a couple of basis points either way isn’t going to rock the boat,” said one. “Others, who might be doing their calculations with, let’s say, sharper pencils, will wait on.

“But the market is apparently open and if you feel like doing a medium or short term maturity, you’ll stand a good chance of finding a home for your paper – the only question is whether it will be at the precise level you anticipated.”

Caisse de Refinancement de l’Habitat (CRH) tapped the market in between its compatriots on Friday, pricing its €750m eight year on the back of peak and final demand of some €1bn and paying a new issue premium of around 7bp after 2bp of tightening to a re-offer spread of 62bp.

A lead banker acknowledged that the deal had progressed relatively slowly, with the starting point deemed relatively tight to Caffil’s 10 year re-offer spread of 71bp, while renewed weakness mid-bookbuilding on the back of negative headlines also hit momentum.

“The issuer was nevertheless able to achieve the size target of €750m,” he added, “with a strong, quality order book and no drops at final terms.”

Renewed weakness and volatility overnight Tuesday-Wednesday had all but extinguished hopes of primary market activity this week, but a 90-day pause on punitive tariffs announced by Trump late yesterday spurred a dramatic turnaround in sentiment, paving the way for the first euro benchmark covered bond in over a week.

“If Trump changes his mind every 36 hours, the market changes every 36 hours,” said a syndicate banker. “This French deal had been rumoured for some time and apparently they just looked at screens this morning, saw the CAC 40 and DAX up, and decided, OK, let’s get it going before he changes his mind again.

“This was a smart decision to the extent that they got the transaction going, and going really neatly.”

Leads BNP Paribas, Crédit Agricole, Commerzbank, JP Morgan and NordLB opened books this (Thursday) morning at around 9.15 CET with guidance of the 77bp area for the euro benchmark-sized April 2035 green public sector obligations foncières, expected ratings Aaa/AAA (Moody’s/DBRS). After close to 40 minutes, they reported books above €1.3bn, excluding €125m of joint lead manager interest, and after around an hour and three-quarters, the spread was set at 71bp on the back of orders above €2.3bn, including €175m of JLM interest. After two hours and a quarter, the size was set at €1bn on the back of books in excess of €2.2bn, including €100m of JLM interest, and the final book was above €2.1bn, excluding JLM interest.

Pre-announcement comparables circulated by the leads included Caffil July 2033s and social March 2036s at 66bp and 69bp, mid, respectively, and CFF March 2035s at 65bp, and another syndicate banker away from the leads put fair value at 67bp-68bp, implying a new issue premium of 3bp-4bp.

“There was maybe 1bp or so of atmospheric concession, if I can put it like that,” he said. “But at the same time, DZ Hyp last week had a relatively hard time on their 9.9 year.

“So Caffil’s €2.1bn final book and a €1bn deal, and the 6bp move from start to finish, there’s absolutely nothing wrong with this.”

In the last euro benchmark covered bond issuance on Wednesday of last week (2 April), DZ Hyp – as part of a dual-tranche trade – priced a €500m 9.9 year Pfandbrief at 47bp, following guidance of the 51bp area and on the back of €1.35bn of orders, with the new issue premium put at 2bp.

A more defensive maturity had been touted as the more likely way for issuers to enter the turbulent market, but another syndicate banker noted that Caffil’s offering clearly made sense for the issuer as well as certain investors.

“It offers 25bp more than DZ Hyp,” he said, “so maybe people just like this delta between France and Germany. And a three or four year would not have fit the funding profile of Caffil.

“They were perhaps not the most natural pick of the French candidates to reopen the market,” added the syndicate banker, “but then again, they are not the most price-sensitive, and are at the wide end of their compatriots, so in that respect they were maybe the right one at the end of the day – and, after all, the deal was a success.”

Caffil’s green covered bond is issued off the SFIL group’s green, social and sustainability bond framework, with the use of proceeds financing or refinancing green investments by French local authorities and eligible green French export contracts in five categories: territorial mobility and soft urban transport; renewable energy; energy efficiency of construction and urban development; sustainable water and sanitation; and waste management and valuation.

In spite of the primary market’s successful reopening, syndicate bankers were hesitant about predicting how supply might develop, even if a “backlog” of issuance has been cited.

“I would be surprised if this triggers a deluge of new deals,” said one. “I don’t think there are many people around who are contemplating coming in the short term, even if everyone is happy to have seen a deal coming and working.”

Following a mandate announcement yesterday, Aareal Bank leads Commerzbank, Crédit Agricole, DekaBank, DZ, NatWest and UniCredit opened books this morning with guidance of the mid-swaps plus 55bp area for a euro benchmark-sized October 2030 mortgage Pfandbrief, expected rating Aaa. After around an hour and 20 minutes, the leads reported books above €2.25bn, excluding joint lead manager interest, and after around two hours and 25 minutes, the spread was set at 49bp and the size at €750m on the back of orders above €2.75bn, including €305m of JLM interest.

“It’s a particular name, as we all know, given their CRE exposure, and we received a lot of ‘no, thank you’ replies yesterday because of this,” said a syndicate banker at one of the leads. “But, as always on transactions like this, the no’s come more quickly to the forefront than the yes’s, who wouldn’t normally show up until you open books, and this was exactly the case here.

“The transaction went very smoothly,” he added, “and the book barely responded to the pricing through the 50bp level, which we had thought could prove to be a bit of a pain barrier for many. So with a €2.6bn book for a €750m deal, this was very successful and, to my understanding, ticked many, if not all of the boxes the issuer was hoping to get ticked.”

He saw the new issue premium as negative – among pre-announcement comparables circulated by the leads, Aareal’s April 2030s were quoted at 49bp and its August 2031s at 53bp.

“It’s fair to argue that fair value for a long five year was rather in the 50s than in the high 40s,” said the lead banker. “It’s not that surprising for a name like Aareal to price inside where the secondaries are optically trading – with the majority of the German universe trading 15bp-20bp tighter, that’s less of a consideration for investors than it might be for a squeezed name like MünchenerHyp.

“So the transaction was in that respect expensive, but it was from the start, and to a significant extent those who weren’t put off by the initial 55bp weren’t put off by the final 49bp, either.”

ABN Amro leads ABN Amro, DZ, Natixis, NordLB and UBS opened books with guidance of the 25bp area for a euro benchmark-sized April 2028 Dutch legislative covered bond, expected ratings Aaa/Aaa (Moody’s/Fitch). After around an hour and 10 minutes, they reported orders above €2.75bn, excluding JLM interest, and after around two hours and 40 minutes, the spread was set at 18bp and the size at €1.5bn on the back of orders above €3.9bn, including €530m of JLM interest. The final book was above €3.75bn.

The Dutch bank’s pricing is flat to where Nordea Mortgage Bank priced a smaller and green €750m no-grow covered bond in the same three year maturity on Friday, with the Finnish issuer also having started at guidance of the 25bp area. That was cited at 16bp, mid, in pre-announcement comparables circulated by ABN Amro’s leads this morning, while Commerzbank February 2028s were at 18bp and ABN Amro August 2027s, issued in August 2023, were at 15bp.

“Double the size and the same spread,” said a syndicate banker at one of ABN Amro’s leads. “It’s a straightforward follow-up to the Nordea, but they didn’t just follow, they painted a bigger picture – they’ve proven on the back of the Nordic trade that there’s still plenty of liquidity in that maturity, but pricing is still up for discussion.

“There are quite a few more traditional bank treasuries not really convinced that this is the best place to be, particularly versus German Länder or agencies like NRW Bank, but for other investors, it’s not that tight compared to other high quality names and what’s available in the triple-A space. So we still had an order book of some €3.75bn.”

DZ Hyp is due next, with a €1bn dual tranche issue comprising 4.4 year green and 9.9 year conventional €500m no-grow mortgage Pfandbriefe. Crédit Agricole, DZ, ING, LBBW, NatWest and UBS are set to launch the deal tomorrow (Wednesday), following a mandate announcement today.

Pre-announcement comparables cited by the leads for the 4.4 year tranche included Berlin Hyp February 2029 and MünchenerHyp August 2029 mortgage Pfandbriefe at 25bp, and LBBW public sector November 2029s at 24bp. Mortgage Pfandbrief references for the 9.9 year included MünchenerHyp March 2035s at 43bp, and LBBW and DZ Hyp February 2034s at 41bp.

“An interesting element tomorrow will be to test the long end,” said a syndicate banker at one of the mandated leads. “We’ve seen 10 years before, but not that often.

“I’m convinced the long end is open, but the price dynamics, investor participation and such remain to be seen.”

Yesterday (Monday), Crédit Agricole Home Loan SFH had the covered bond market to itself for a 7.25 year euro benchmark.

Leads Commerzbank, Crédit Agricole (global coordinator), NordLB, RBI and Scotiabank opened books with guidance of the mid-swaps plus 61bp area for a euro benchmark-sized July 2032 green covered bond, expected ratings Aaa/AAA/AAA (Moody’s/S&P/Fitch). After around an hour and three-quarters, they reported books above €2bn, excluding joint lead manager interest, and after close to two hours, the spread was set at 53bp on the back of orders above €3.7bn, and the size was subsequently set at €1.25bn with the book above €3.5bn, pre-reconciliation and excluding JLM interest. The final book good at re-offer was confirmed at more than €3.5bn, excluding JLM interest.

“Despite the risk-off tone, investors were highly engaged in the process, with several triple-digit real money orders at the top of the book,” said a banker at one of the leads. “The long seven year tenor was chosen to differentiate from the six year issued earlier in the year and also to avoid credit curve steepness to 10 year.

“The opportunity for accounts to pick-up rare triple-A rated secured paper at 3% helped the overall pricing dynamics, with zero NIP and very limited book attrition through the last pricing iteration. Remarkable was that the transaction priced 5bp inside the interpolated OAT curve.”

Crédit Agricole Home Loan SFH February 2031s, issued on 6 February at 48bp, were quoted at 42.5bp in pre-announcement comparables circulated by the leads, while CRH February 2032s, re-offered at 56bp on 10 February, were seen at 51bp.

Banks and private banks were allocated 42%, asset managers 24%, central banks and official institutions 22%, insurance companies and pension funds 10%, and others 2%. Germany, Austria and Switzerland took 45%, the Benelux 17%, France 15%, southern Europe 11%, the Nordics 7%, the UK and Ireland 4%, and eastern Europe 1%.

Crédit Mutuel Home Loan SFH’s new issue was announced yesterday (Monday) morning and leads CIC, Commerzbank, Danske and Natixis this morning went out with initial guidance of the mid-swaps plus 72bp area for the euro benchmark-sized July 2032 issue, expected ratings Aaa/AAA/AAA (Moody’s/S&P/Fitch). After around an hour and a quarter, they reported books above €3bn, excluding joint lead manager interest, and after around two and three-quarter hours, they set the spread at 63bp on the back of books above €4.75bn. The deal was ultimately sized at €1.5bn – the top end of Crédit Mutuel’s target range – with the final book above €4.6bn, including €125m of JLM interest.

“The announcement yesterday morning was just to plant a flag in the sand, rather than because feedback was very necessary, and investors were truly ready to engage from the word ‘go’ this morning,” said a syndicate banker at one of the leads. “What was notable for us was the diversity of accounts involved – you could say that covered bonds from the French jurisdiction appeal to more investors than before, for example, among asset managers and pension funds.

“And it was a very solid order book – that was proven by the fact that there was negligible attrition.”

He said the success of other French issuance in the same part of the curve had given them confidence regarding demand for the new issue, noting that further along the curve French issuers would have to pay up due to the steepness of the OAT curve. The new issue was ultimately priced at 1bp through OATs, which had tightened 1bp since the deal’s announcement.

According to pre-announcement comparables circulated by the leads, Crédit Mutuel March 2032s were trading at 65bp, mid, and its February 2033s at 66bp. BPCE March 2032s and Arkéa January 2032s issued last week were at 62bp and 60bp, respectively, after having been re-offered at 65bp and 60bp. The lead banker today put fair value at 65bp, implying a new issue premium of minus 2bp following the 9bp of tightening.

“I wouldn’t say the starting point was generous,” he added. “We generally saw spread travels of 6bp-8bp last week, so if we had priced at fair value, we would have been in the middle of that.”

Following a mandate announcement yesterday, Argenta Spaarbank leads ABN Amro, Belfius, LBBW and Natixis opened books this morning with guidance of the mid-swaps plus 63bp area for the euro benchmark-sized February 2032 mortgage Pandbrieven, expected rating AAA (S&P). After a little over an hour, they reported books above €2.5bn, excluding JLM interest, and after around two hours and 20 minutes, they set the spread at 55bp and size at €1bn on the back of books above €3.3bn. The final book was above €2.5bn, including €75m of JLM interest.

The €1bn deal is the Belgian bank’s largest euro benchmark, following issuance of €500m deals from 2021 to 2023 and then two €750m covered bonds last year, each in green format.

“The issue went well, no doubt about it,” said a syndicate banker, who saw the deal coming roughly flat to fair value.

Argenta February 2034s were trading at 60bp, mid, according to pre-announcement comparables circulated by the leads, while ING Belgium February 2031s were at 45bp.

The deal was the first Benelux euro benchmark of the year, and followed the first Nordic of the year yesterday, when DNB Boligkreditt issued the largest benchmark yet in 2025, a €1.5bn five year.

Leads BMO, DNB, Helaba, HSBC, LBBW, UBS and UniCredit built a peak book of some €5.75bn and final book above €5.5bn and tightened the Norwegian’s spread from the 55bp area to 36bp, implying a new issue premium of up to minus 2bp.

“This was a phenomenal transaction,” said a banker at one of the leads. “The strength of demand gave the issuer options on size and spread so it could upsize and squeeze on price.”

He noted that DNB’s deal is the tightest five year yet in 2025 – the previous tightest was LBBW’s February 2030.

“We believe this was also the fastest bookbuild of the year,” added the banker, “with €3bn in 45 minutes and €5.5bn after an hour and a half.

“It captures quite nicely the strength of the covered bond market at the moment. It feels like the days of old, with the book sizes and moves we are seeing.”

Yorkshire Building Society meanwhile issued a €600m five year yesterday at 42bp, tightened from 48bp on the back of a final book of some €1.95bn of demand and with a basis point or two of new issue premium, bankers said. BMO, BNP Paribas, NatWest, Santander and UBS were leads.

DZ Hyp is expected tomorrow (Wednesday) with a seven year mortgage Pfandbrief after a mandate announcement this morning. CIBC, Danske, DZ, Erste, Natixis and NordLB are leads.

According to pre-announcement comparables circulated by the leads, DZ Hyp April 2031 public sector Pfandbriefe were quoted at 38bp, mid, and May 2032 mortgage Pfandbriefe at 39bp. Of this year’s German supply, Commerzbank December 2029s and LBBW February 2030s were both seen at 32bp, after having been re-offered at 36bp and 40bp, respectively, while Bausparkasse Schwäbisch Hall (part of the DZ group) January 2031s were at 34bp, in from 40bp.

The French issue – the fourth of the week and fifth of the year – attracted some €3.5bn of orders against its €500m no-grow size, allowing for 10bp of tightening from initial guidance of the mid-swaps plus 70bp area to 60bp, flat to fair value, according to a syndicate banker at one of leads Arkéa, Crédit Agricole, DZ, ING, Natixis and UniCredit.

“Today’s Arkéa was basically as mad as yesterday’s deals, as mad as the day before yesterday’s…” he added. “It’s definitely a very unusual situation: covered bond order books being seven to 12 times done is not what we are used to lately – it’s more like high beta corporate business or subordinated capital.

“So if you are in a position to make use of this grossly imbalanced demand-supply constellation, you may feel tempted to do something, and Arkéa was apparently tempted.”

The €9.75bn aggregate of issuance represented a sharp pick-up from last week’s €4.25bn, which had undershot expectations that were already low.

“Last week there wasn’t so much covered bond supply and everything enjoyed a lot of demand and went very well,” said a syndicate banker. “This week, while not gigantic, we have had a substantial amount, so scarcity isn’t such a factor, but we have continued to see everything work, from Bausparkasse Schwäbisch Hall to Hana Bank.”

The German’s €500m six year mortgage Pfandbrief achieved the highest oversubscription ratio and most demand of any tranche this week, some €6.3bn, meaning it could tighten pricing to flat to fair value – in line with several other regular issuers. A book of around €2.1bn and new issue premium of 2bp for South Korean Hana Bank’s €500m three year were at the more modest end of the week’s metrics, but deemed a success for the less frequented jurisdiction.

Issuing alongside the pair on Wednesday, Crédit Agricole Public Sector SCF could even achieve a negative new issue premium, coming 1bp inside fair value with a €500m 4.5 year deal that attracted some €3.9bn of orders at re-offer.

While no new issue premium was officially cited by lead managers of a Caja Rural de Navarra (CRN) €500m 8.25 year sustainable cédulas yesterday (Thursday), market participants put pricing comfortably inside fair value. The deal came after only four Spanish euro benchmarks last year and was the longest of the week, matching the achievement of fellow southern European Crédit Agricole Italia last week.

“With the scarcity of their cédulas, the €500m no-grow and social element were helpful in maximising demand from investors,” said a syndicate banker at one of the leads, “while we have seen the longer end work very nicely.

“It’s very impressive that they were able to achieve pricing through BPCE, even in a longer maturity. It really shows where the market is at the moment – especially for French issuers.”

CRN’s 8.25 year was priced at 58bp over mid-swaps, versus 65bp for BPCE SFH’s €1.25bn 7.2 year the same day.

Deutsche Pfandbriefbank (pbb) paid a new issue premium of 4bp for a three year mortgage Pfandbrief yesterday, but was able to tighten 7bp from initial guidance to mid-swaps plus 60bp and upsize from €500m to €750m on the back of some €3.7bn of orders.

“They have been through some difficult executions in the past,” said a lead banker, “so they were naturally a bit more cautious, but it was a fantastic outcome to see where they priced.”

A €2bn dual-tranche issue from Santander UK took the day’s supply to €4.5bn, making it the busiest day yet in 2025 with more than last week’s total issuance.

Blackouts could dampen issuance next week, with syndicate bankers expecting technicals to continue to support the primary market.

Crédit Agricole Italia and Landesbank Baden-Württemberg (LBBW) reopened the primary market with the first euro benchmarks since November on Wednesday, followed by deals from NordLB yesterday (Thursday) and Caffil today – the French issuer having concluded 2024 supply on 25 November.

The first full week of January is usually the busiest week of the year, but – on top of Monday being a public holiday in many parts of Europe – factors that had been cited as dampeners going into year-end indeed combined to subdue issuance.

“There was a consensus – perhaps to a damaging extent – that covereds were going to be sidelined at the start, given that seniors are so attractive and covereds don’t appear to have found their home yet amid the SSA widening,” said a syndicate banker. “So covered bonds were caught between a rock and a hard place, and didn’t know where to go.

“This translated into an extremely slim turnout.”

The €4.25bn total this week compares with €13.25bn of euro benchmark issuance in the 1-5 January week of 2024, with €3.75bn of that having been sold on 2 January alone. Covered bond supply this week was also overshadowed by unsecured bank issuance.

Those issuers who did opt for covered bonds this week found ample demand, after the first two both adopted pricing strategies that took into account the prevailing dynamics and recent lack of supply.

Credit Agricole Italia (pictured) achieved the biggest book of the week when it attracted a peak €7bn-plus of orders to a €1bn nine year OBG. Leads BBVA, Crédit Agricole, LBBW, Mediobanca, Natixis, RBI and UniCredit tightened pricing from IPTs of 100bp-105bp over mid-swaps to guidance of 90bp+/-2bp, ultimately pricing the February 2034 benchmark at 88bp on the back of a final €6.4bn-plus book.

“It was a proposition that was very difficult to miss,” said a syndicate banker at one of the leads, “especially for those credit portfolio managers that are happy to look at both covered and seniors and play the relative value between asset classes and geographies – Crédit Agricole Italia came with triple-digit IPTs when on the same day you had a trade like DNB starting at the 95bp area for a senior preferred.”

The Norwegian trade was a €750m six year non-call five green bond tightened to 70bp.

With there having been little long-dated euro benchmark issuance for some time, let alone long-dated OBG issuance, Crédit Agricole Italia’s leads did not declare a new issue premium, but a banker suggested it offered a pick-up in the high single-digits over outstandings. The pricing was 16bp inside BTPs.

A €1bn five year mortgage Pfandbrief from LBBW on the same day was a more typical new year reopener and enjoyed a strong reception, attracting some €5.7bn of demand. Leads DZ, Erste, LBBW, Rabobank and TD went straight out with will-price-in-range guidance of 40bp-42bp and achieved the tighter end, although the new issue premium was put at around 7bp.

“They played it super-safe by limiting themselves to a 2bp move in choosing this pricing approach, because their overriding ambition was to get the €1bn securely under their belt,” said a syndicate banker. “As they have plenty to do, I don’t blame them for that and it was the right tactics, but I think with hindsight it wasn’t necessary.”

Yesterday, NordLB followed up with a €1bn 3.75 year green mortgage Pfandbrief that attracted some €5bn or demand. Leads DZ, Helaba, Natixis, NordLB, RBC and Santander adopted a more common approach to pricing and tightened from the mid-swaps plus 38bp area to 33bp, equivalent to a new issue premium of around 3bp.

Caffil then launched the biggest euro covered bond of the week today (Friday), a €1.25bn 8.5 year via Barclays, Crédit Agricole, JP Morgan, LBBW and Natixis. The new issue attracted some €5.25bn of demand, allowing pricing to be tightened from the mid-swaps plus 78bp area to 69bp.

“It’s a super-strong trade,” said a syndicate banker at one of the leads. “The main milestone here for Caffil is that they are pricing inside OATs – we started with IPTs just marginally back of OATs on an interpolated basis, and priced it inside.”

He added that the pricing reflected zero new issue premium.

A syndicate banker remarked that the strength of demand for Caffil’s and NordLB’s trades was at the high end of their previous achievements.

“Books seem surprisingly big at the moment,” he said. “Where is this demand coming from? Maybe it is partly due to the fact that supply is so scarce, so those investors who want to buy covered bonds believe that there won’t be much around the corner so they should get what they can – if they had had heard that there was €15bn per week to come, they probably wouldn’t have rushed in so aggressively.

“Bearing in mind that an avalanche is still not expected, this is good news for issuers, because it seems to provide for fertile ground when it comes to grinding spreads tighter. Let’s see what happens, because we are aware of some issuers looking at hitting what appears to be such a receptive market.”