Evidence of investor demand for US dollar assets and Pfandbriefe, and the opportunity to raise dollar funding at a very attractive level prompted BayernLB to make a rare, opportunistic benchmark foray in the currency this week, according to an official at the issuer.

The German bank yesterday (Tuesday) sold a $500m (Eu381m) two year mortgage Pfandbrief in Reg S format, its first large publicly placed US dollar covered bond since October 2005. The deal was priced at 30bp over mid-swaps, in line with guidance, via sole lead JP Morgan.

Miriam Scuka, head of funding execution at BayernLB, said that the deal was opportunistic, with the issuer’s strategic focus being on euros.

“Recent deals for Münchener Hyp and NordLB showed that there is demand for dollars and for German Pfandbriefe,” she said, “and JP Morgan felt that there was an opportunity for us in this context.

“The re-offer level was so attractive and we had the possibility to do a $500m deal so we proceeded on this basis.”

NordLB last Wednesday became the first Pfandbrief issuer to target the US market with a benchmark Pfandbrief since before the crisis, selling a $1bn three year public sector issue at 50bp over mid-swaps that is said to have performed in the secondary market. Münchener Hypothekenbank is the only other German issuer to have sold a benchmark sized dollar covered bond this year, printing a $500m Reg S three year mortgage backed issue in July.

Scuka said that BayernLB benefitted from supply having been limited, and that the short dated deal was a good fit for the issuer and investors.

A syndicate banker on the deal said that the performance of NordLB’s trade in the secondary market was a good indication of there being healthy interest for rare German names in dollars, and suggested that there is scope for more Pfandbrief supply in the currency.

In addition to NordLB’s deal, a $400m two year floating rate from Erste Abwicklungsanstalt (EAA) on Monday also served as a comparable, according to the syndicate official, with BayernLB achieving a good level relative to EAA in dollars compared with how the issuers’ paper trades in euros.