CaixaBank and Sparebanken Vest Boligkreditt highlighted the pricing advantage of ESG issuance in a slowing market on Wednesday, as both the Spanish lender's inaugural Covid-19 bond and the Norwegian's green covered debut priced without concessions.
Most of the major currency deals brought to the market or added to the pipeline by financials this week have been green or social bonds.
Bankers said the timing could partly be explained by the relatively long preparation time that goes into ESG deals, meaning issuers get to them later in their annual funding plan.
"But also, if you've got a green deal to do it makes sense to do it when markets are perhaps not as frothy, as it can support execution certainty that bit more," said a DCM banker.
"We've hit July 1, there's a big rally behind us, so it makes sense to see these deals now."
Books were opened for CaixaBank's six-year non-call five transaction with initial price thoughts of 150bp area.
Leads CaixaBank, HSBC, ING, Natixis and UniCredit then set guidance at 120bp area (+/-3bp WPIR) and fixed the size at €1bn before launching the deal at 117bp.
The final book stood above €2.8bn, having peaked above €3.35bn.
"It is a bit better than some of the trades last week, where we saw more minimal oversubscription," said a syndicate banker. "It's nice to see €3bn books are back on table."
The deal - CaixaBank's first senior with a callable maturity structure - was priced roughly flat to the bank's conventional senior preferred curve. Its 1.125% March 2026s were bid at 118bp at Wednesday's open, according to Tradeweb figures.
Issuers typically have to pay 5bp-10bp additional premium versus bullets to issue a callable maturity.
Sparebanken Vest's leads Credit Suisse, ING, LBBW, Natixis, SEB and Swedbank marketed the €500m (no-grow) deal with initial price thoughts of mid-swaps plus 15bp area.
Guidance was revised to 12bp area (+/-1bp WPIR) before the spread was fixed at 11bp. Books were last reported around €1bn.
Fair value for a conventional seven-year Sparebanken Vest covered bond was around 11bp, based on the issuer's secondaries.
Bankers said it was especially notable that the two deals priced without new issue premiums as concessions had been on the rise in recent sessions.
Berlin Hyp also bucked that trend when it priced a €500m green covered bond at 5bp on Tuesday, offering a premium of just 1bp.
Bankers suggested the additional ESG demand was one of the key drivers of the deals' tight pricing - alongside the high quality of the issuers and a slowing pace of issuance.
"Take the Caixa deal, which offers a decent spread, is a good name and has the social angle," said the DCM banker. "Everything points to investors, quite rightly, differentiating a bit more at this point in cycle.
"The big rally is behind us, the summer slowdown is ahead, and investors don't need to chase every deal."
The proceeds of CaixaBank's deal will be used to provide financing to micro-enterprises and SMEs to mitigate the economic and social impacts of Covid-19 in the most economically disadvantaged regions of Spain.
CaixaBank's €4bn portfolio of assets eligible for its social bond programme includes €1.7bn of new loans granted to address Covid-19 pandemic issues, as at the end of May.
The deal is expected to be rated expected to be rated Baa1/BBB+/A-/A (Moody's/S&P/Fitch/DBRS).
Sparebanken Vest's deal, which followed investor calls held on Tuesday, inaugurates the Norwegian issuer's green bond framework.
The proceeds of bonds issued under the framework will be allocated to new and existing mortgages for energy efficient residential and commercial buildings in Norway and loans to renewable energy projects.
Further ESG supply is in the pipeline. Korea's Kookmin Bank is preparing its first sustainable covered bond, following a €500m social covered for Korea Housing Finance on Monday.
Insurers Generali and Uniqa are meanwhile marketing green Tier 2 transactions.