Austria

Bank Austria launched a Eu1bn three year public sector deal off the back of its largest order book yet on Wednesday. Though benchmark issuance stalled on Thursday, the trio of deals launched so far this week have been exceptionally well received, with the market rewarding rare high quality core names.

Having sold its first Eu1bn print in February, Bank Austria returned to market on Wednesday, convincing over 100 accounts to participate in a Eu1bn three year public sector backed benchmark deal.

Banque Populaire Caisse d’Epargne restarted benchmark issuance on Tuesday, launching the first euro denominated Obligations á l’Habitat. The inaugural Eu2bn deal was well received by a cash rich investor base that has had to make do with secondary market purchases since April 14. Though there was no further primary issuance, UniCredit Bank Austria and Sweden’s Stadshypotek mandated leads for three and five year deals respectively, to be launched in the near future.

The covered bond market remains primed for issuance despite the quietest week so far this year in terms of primary market activity. Spanish borrowers may join Abbey National and Westpac New Zealand in the market next week, though Abbey’s inaugural sterling issue and Westpac’s first covered bond transaction are set to take centre stage.

Bank Austria priced its first Eu1bn deal on Wednesday. Westpac New Zealand is expected to launch its first euro benchmark covered bond in the near future and Abbey National is due to finish roadshowing on Friday for its inaugural sterling issue.

Landesbank Hessen-Thueringen GZ had the market to itself on Monday, launching its second floating rate covered bond of the year. Though there was a mandate announcement from Caisse de Refinancement de l’Habitat, primary activity has begun to lessen. Nevertheless, names from further afield are on the horizon, with Portuguese national champions watching the market closely and New Zealand’s Westpac expected in the next few days.

The primary market has picked up, with two deals emerging and one pricing. Demand is robust and there is good scope for further issuance, say bankers. Deutsche Postbank opened and closed books on Tuesday morning for a Eu1bn mortgage backed 10-year Pfandbrief while Kommunalkredit Austria looked set to price a Eu500m five year later in the day.

The primary market has slowed to a standstill today, though transactions are in the pipeline and could be due this week — including some new names. In the secondary market, the peripheral sovereign sector has softened but the bid for peripheral covered bonds continues to look well placed.

The new issue market is gingerly picking up steam with CIF Euromortgage imminent and Kommunalkredit on the road. Sentiment is positive and has been boosted by a likely strong result for the EFSF deal. That said it’s clear that issuers must continue to offer attractive new issue premiums especially in France, the most prolific of regions so far this year.

Austria’s Erste Group Bank has closed books on a Eu1bn 10 year benchmark, which is expectred to price in line with guidance of the low 70bp over mid-swaps area. The rare benchmark, jointly led by Barclays Capital, Credit Agricole, DZ Bank and Erste, has proved a runaway success.

A Eu500m five year Pfandbrief for Austria’s Bank für Arbeit und Wirtschaft (Bawag) was largely unaffected by background uncertainty about the prospects of Ireland signing up for financial assistance, although pricing ambitions were slightly reigned in, according to a syndicate official at one of the leads.

Demand from domestic and German accounts enabled Austria’s Bank für Arbeit und Wirtschaft to today (Tuesday) negotiate a difficult market backdrop to launch a Eu500m five year deal, while a Bank of New Zealand inaugural euro issue is scheduled for launch tomorrow and Caja Madrid has released the spreads for new issues and a cédulas tap being launched as part of an exchange offer.