Westfälische Landschaft Bodenkreditbank launched a Eu500m 10 year mortgage Pfandbrief this (Thursday) morning and found strong demand from investors given that it was the first long dated German Pfandbrief benchmark in almost a year, said market participants.

WL Bank leads DZ Bank, HSBC, LBBW, UniCredit and WGZ Bank started taking indications of interest at the 30bp over mid-swaps area before going out with official guidance of the 28bp over area and fixing the spread at 26bp. The books were closed at 1030 CET with orders in excess of Eu1.8bn for the Eu500m no-grow deal.

“The book was built in about 45 seconds and continued to grow from there,” said a syndicate official at one of the leads.

He said pricing was tricky because of a lack of true comparables.

“It was really a matter of just feeling where the market was,” he said. “The market is crazy.”

WL Bank last came to the market in May 2011 with a Eu1bn five year at 11bp over. The last 10 year Pfandbrief was a Eu500m deal for Eurohypo on 31 March 2011, which was priced at 57bp over mid-swaps.

A syndicate official away from the leads said today’s trade was a “slam dunk”. He noted that the deal was three times oversubscribed with a German investor base that has not seen much Pfandbrief issuance.

“For internal reasons, many investors need to buy German paper,” he said.

Other syndicate officials away from the leads were positive about the transaction, but said that it started a bit wide at 30bp over mid-swaps.

“My personal estimation would be that it would have been 2bp-4bp tighter,” said one, “but perhaps they started quite cautiously because of the weaker market backdrop today.

“This deal – with its scarcity value – works more or less any time,” he said, adding that the Pfandbrief market was dried up, particularly in the secondary market.

The deal was launched against what market participants said was a softer market backdrop, with one citing pressure on Spanish government debt in particular.