Pbb met with the warmest reception for any of three benchmark Pfandbrief offerings it has launched since September when it yesterday (Thursday) issued a Eu500m no-grow seven year deal, and an official at the issuer said that it is “on the right track”, with larger order sizes a positive feature.

More than Eu1.3bn of orders were placed for the mortgage backed Pfandbrief, with some 84 accounts participating. Leads Crédit Agricole, Commerzbank, LBBW and UniCredit priced the deal at 60bp over mid-swaps, the tight end of guidance of 60bp-65bp over, which followed initial price thoughts of the mid-60s.

Syndicate officials away from the deal had noted that it was the most successful of the issuer’s recent benchmark transactions, and Andreas Schenk, head of treasury at pbb, said there has been a steady improvement with each deal since September.

“We are on the right track,” he said. “Spreads in our covered bonds are tightening, including in the secondary market, and the level of oversubscription of the recent bond shows demand is there.”

Pbb sold a Eu500m five year mortgage Pfandbrief at 68bp over mid-swaps at the end of September, and a Eu500m four year in January at 75bp over, with the latter trading at 39bp over, according to a lead syndicate official. At 60bp over, the re-offer spread on the new issue did not contain a new issue premium, he said.

Schenk said it is also encouraging that an increasing number of investors have credit lines for pbb and that larger orders are being placed.

“In previous deals we had a relatively high number of accounts, but the ticket sizes were more limited,” he said. “We are starting to see orders above Eu50m, which is positive.”

The timing of the transaction was in line with the issuer’s plans for 2012, according to Schenk.

“We aim to have a regular presence in the market,” he said. “We wanted to do a deal before the summer break as we still intend to issue at least one to two further benchmarks this year.

“It was planned for a while, and we just needed to take into account technical details such as next week being a short working week in Germany, before making the decision to go ahead.”

A seven year maturity was chosen to build a yield curve and provide investors with more reference points, he added, with the maturity also a good fit from an asset-liability management perspective.

“Our liquidity situation is comfortable,” said Schenk. “Eu500m is a very good deal for us.”

Germany took the bulk of the bonds (80%), followed by Austria and Switzerland with 5%, Scandinavia 5%, Asia 3%, the UK 3%, the Benelux 2%, and others 2%. Banks were allocated 41%, funds 40%, central banks 11%, retail and corporates 7%, and others 1%.