Deutsche Pfandbriefbank (pbb) decided to play it safe and take advantage of an issuance window to yesterday (Wednesday) launch its third deal of the year rather than risk waiting until after the summer, an official at the issuer told The Covered Bond Report, with pbb planning at least one more benchmark in 2012.

The issuer sold a Eu500m no-grow five year mortgage issue at 38bp over mid-swaps, the tight end of guidance, to bring its benchmark funding to Eu1.5bn in the first half of the year. Yesterday’s deal came just over a month after pbb’s last transaction, a Eu500m seven year mortgage Pfandbrief, in late May.

Andreas Schenk, head of treasury at pbb, said that the issuer decided to take advantage of an issuance window knowing that market activity would likely slow down during the summer and that conditions afterwards may not be conducive to new supply.

“We cannot predict market conditions after the summer period,” he said. “Although yesterday’s deal means that we are cash long we wanted to take the opportunity rather than run the risk of not being able to do a deal after the summer.”

Pbb aims to launch at least one more benchmark this year, he added.

Pbb has year-to-date advanced further with its fundraising than with new business origination so that its most recent benchmarks to a certain degree constitute pre-funding, said Schenk, but the issuer is optimistic that it will be able to book new business to go with the funding.

Its latest deal confirms that pbb is successfully establishing itself on the benchmark market, said Schenk.

“We are on the right path,” he said. “At times the pricing of our bonds did not fully reflect our position in the Pfandbrief market. As a result of our intensive investor relations, investors better understand our business model and its strengths and opened credit lines again.”

Positive developments also include a narrowing of the price differential between pbb benchmark Pfandbriefe and those of some of its peers and a broadening of the investor base, according to Schenk.

The level of non-domestic demand for its five year deal is encouraging, for example, he said.

“There were a lot of good quality orders in the book and a nice spread of investor type,” said Schenk. “For the first time we had substantial demand from international accounts.”

Leads Barclays, Commerzbank, Deutsche Bank and Landesbank Baden-Württemberg built an order book of some Eu1.3bn in one-and-a-quarter hours, with a re-offer spread of 38bp over mid-swaps representing pricing through pbb’s secondary market benchmark curve, according to a lead syndicate official. Around Eu600m of indications of interest had been placed when the leads soft sounded the transaction in the low 40s on Tuesday afternoon. The  bonds were this (Thursday) morning said to have tightened by 2bp-3bp.

Some 37% of the bonds were allocated to foreign accounts, with Asia taking the bulk at 20% of the total allocation, followed by Switzerland with 5%, Scandinavia 5%, and others 7%. Banks took 37%, fund managers 30%, and central banks 26%.