Land NRW took advantage of relentless demand for German regional supply with a book of over €6.5bn for Monday's five-year benchmark LSA.
"I can't recall this type of book for any given Laender transaction - it's really quite dramatic," said a banker.
Like other German states, NRW has increased its funding requirements in response to the coronavirus crisis, and may look to borrow more than €40bn this year, up from an initial target of €14bn-16bn.
The spectre of greatly increased supply had no ill effects, however, with NRW getting its deal away at the upper end of size expectations and 3bp inside guidance.
"You have tonnes of supply but there's also tonnes of spare liquidity out there and as long as you have those parts more or less matching, then you have no concerns for anybody," said the banker.
"Apparently no one is concerned that the public sector has to finance more than previously forecast, and the world is awash with cash. For the likes of banks it is a lot smarter investing with NRW than putting money with the ECB at ruinous rates."
The ECB deposit rate is -0.50%. The reoffer yield for NRW came out at -0.088%.
Leads began marketing at swaps plus 17bp area, roughly in line with offered-side quotes on the €3bn 0.2% Apr 2030 LSA that NRW placed in early April (at plus 27bp). The landing spread of 14bp meant no concession, with all four 2025 bonds on the NRW curve bid in the 13bp to 15bp range.
"On aggregate, Laender in double digits over swaps is not exactly a bargain but it's still attractive. We only lost two tiny orders on spread concerns, which didn't really rock the boat," said the banker.
The trade comes less than a week after NRW made its largest US dollar outing, a US$1.75bn three-year fixed and US$1.2bn 18-month FRN.
Deutsche Bank, DZ BANK, JP Morgan (B&D), Nomura and UniCredit ran the euro deal.
EURO SUPPLY
Issuers expected to print deals soon include the regional government of Madrid, EIB and Ontario Teachers' Finance Trust (ONTTFT).
Madrid has put out IPTs of Bonos plus 28bp area via ING (structurer), BBVA, Credit Agricole and Santander for an expected €500m Jul 2027 green issue.
The deal will be the first green note from Spain's government/regional sector.
The borrower held three days of investor calls last week to prepare the ground.
EIB has named leads for a seven-year EARN, while ONTTFT will at last print its debut euro transaction.
The Canadian issuer (Aa1/AA+/-/AAA), guaranteed by Ontario Teachers' Pension Plan Board, first mandated banks for European investor meetings in February.
A fortnight ago it announced a series of calls, saying an issue could follow as soon as the week of April 20. Monday's update said the trade would be a five-year benchmark.
Commerzbank analysts expect sovereign activity in the primary market to be quieter in the coming days than last week, when the likes of Italy, Spain and Luxembourg all raised funds.
"While the peripheral syndication pipeline seems cleared for now the focus shifts to core/semi-core with Finland still a prime candidate and Germany's inaugural 15-year Bund is waiting in the wings in May," wrote Commerzbank analysts.
Lithuania, though, has mandated for a new euro benchmark offering across five-year and 10-year tranches.
DEXIA APPROACHES DOLLARS
In dollars, Dexia Credit Local is readying a Reg S/144A three-year benchmark with IPTs at swaps plus 45bp area.
Dexia's 2020 funding target is €4.5bn, down from €7bn last year, which was itself a decrease from the €13bn or so it used to raise.
Barclays, Citi, Credit Agricole, JP Morgan and Societe Generale are running the deal, which will be Tuesday's business.