Euro

BNP Paribas priced a heavily oversubscribed 10 year trade through its outstanding curve on Thursday, opening the door to a world of negative new issue premiums.

Stadshypotek built the largest ever order book for a Nordic covered bond on Wednesday, with the year’s first euro benchmark from a Swedish issuer.

DNB Boligkreditt showed that, for the right name from the right jurisdiction, yield hungry investors will make concessions to get exposure. The strength of interest for its latest 10 year offering allowed it to push both spread and size, and still leave appetite unsated.

After a four week gestation period, Bankinter priced the first Spanish deal since February 22, and its first funding since January 2011. The transaction was remarkable, not just for its size and pricing, but particularly for its tenor — which at five years, was well beyond the LTRO supported three year point.

Spain’s Bankinter launched a long awaited benchmark on Monday, pricing only the fourth euro jumbo in as many weeks. Spreads could widen suddenly if conditions deteriorate, warned analysts, but with supply scarce and curves steep between three to five years, investors will continue to ride the wave of optimism.

A Norwegian issuer – believed to be DnB Nor Boligkreditt is considering a 10 year trade, but is struggling to offer an attractive coupon in such a low yield environment, syndicate officials said on Wednesday. Though real money accounts are long cash and eager to put money to work, they may have to move down the credit curve to hit their targets.

The European Commission’s plan to rotate rating agencies should be scrapped, the European Covered Bond Council (ECBC) and European Mortgage Federation (EMF) have strongly recommended.

The global covered bond market continues to look strong, with a trio of issuers collectively raising the equivalent of more than €4.5bn, on the back of more than €9bn in demand across two currencies. But whether the market’s euphoria can hold out until the end of this week, however, remains to be seen as doubts are starting to creep back in with Thursday’s Greek liability management cut off date fast approaching.

The covered bond market ended the week in exceptional shape. Société Générale’s €1.5bn seven year benchmark was trading 10bp tighter in the secondary market on Friday, after pricing at 107bp over mid-swaps on Thursday. Though some syndicate bankers said the trade was priced through the issuer’s outstanding curve and had been a strong success, other felt initial guidance had been too wide.

The covered bond market remains extremely well supported, with recent deals all performing well and secondary flows largely one way. Commonwealth Bank of Australia and Toronto-Dominion have mandated for dollar trades. Yorkshire and Coventry Building Societies have left blackout but could turn to sterling. Bankinter has mandated in euros but is biding its time while Cédulas spreads tighten. ING DiBa is expected soon after roadshowing last week.

Société Générale built a €6bn book for its second trade of 2012 on Thursday, pricing a €1.5bn benchmark well inside initial guidance. Meanwhile, Credit Suisse launched only the second dollar trade from a European bank since last September.

A higher than expected take-up from a broader number of banks in the European Central Bank’s second long term refinancing operation has provided a lift to what is already a very well bid covered bond market.