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Bank of Nova Scotia and BayernLB found good demand for their covered bonds issued in the belly of the curve on Friday, but UniCredit AG (HVB) experienced a more challenging sales process for its 10 year Pfandbrief. Crédit Agricole will be hoping for a better reception when it issues a 10 year next week.
Bank of Nova Scotia (BNS) mirrored Bank of Montreal’s (BMO) earlier deal this week in terms of size, final spread and tenor, pricing a €1.25bn five year at 18bp over mid-swaps.
But with demand of €1.5bn, the order book was €250m below BMO’s. Fair value was seen at 14bp, midway between trading levels for BMO’s October 2023 and Toronto Dominion’s April 2024, suggesting a new issue concession of 4bp, which was also the same as BMO.
The deal was jointly managed by HSBC, LBBW, RBC Capital Markets, Scotiabank and UBS.
A lead manager on the BNS deal pointed to the issuer’s “elegant execution strategy”, whereby initial guidance was set at 20bp plus or minus 2bp, with the aim to price in that range.
This compares with the more usual strategy of starting wide and gradually ratcheting the spread tighter as orders build.
BayernLB also had little trouble selling a €500m no grow six year mortgage Pfandbrief on Friday, pricing the deal at 4bp over, from initial guidance of 5bp area, and with solid demand of more than €1bn.
BayernLB’s outstanding deals due March 2025 and September 2025 were respectively indicated at 1bp through and 2bp through mid-swaps, implying fair value at around flat to mid-swaps and a modest concession of 5bp.
Lead managers on the deal were BayernLB, Crédit Agricole, Helaba, ING and Société Générale.
The two transactions...