Deutsche Kreditbank (DKB) launched a Eu500m no-grow five year public sector Pfandbrief today (Friday), the third German deal this week to be priced at a tight level, although bankers said that this caused no significant obstacles for the new issue.

Leads Barclays, BayernLB, Deutsche, UniCredit and WGZ set initial price thoughts at the 4bp-5bp over mid-swaps area, then guidance at 4bp over, and the re-offer at 3bp over mid-swaps, collecting Eu600m of orders.

A syndicate banker away from the leads said the deal was going reasonably well. He said leads had correctly brought the deal to market “not too aggressively”.

“Possibly at the beginning of the week someone could have thought that DKB could have gone a bit tighter,” he said, “but Deutsche Hypo made people think twice about German names so all in all is OK.”

Aareal Bank and Deutsche Hypothekenbank placed five year deals of Eu625m and a Eu500m on Monday and Tuesday, respectively, each priced at 1bp over mid-swaps, although oversubscription on the latter issue was considered modest.

The syndicate banker noted that the deals had all the same tenor.

“They are all in the five year corner, so there is a bit of accumulation here, but the market seems rather undisturbed,” he said.

A syndicate banker at one of leads said this was not a cause for concern.

“Yes this is the third in a week, but this is a German Pfandbriefe issuer,” he said. “It doesn’t make any difference on how well the deal would go.”

The syndicate banker away from the leads said that covered bonds issued by German and Nordic issuers have been tightening from already tight levels this week.

“I think we are close to the end of this,” he said. “I don’t foresee them tightening even further, considering that they are so close to zero in terms of spread.”

Deutsche Kreditbank’s deal came in a week that also saw significant issuance from the periphery, especially Spain, showing again that the market is open at the two ends of the market, said another syndicate banker. He said that this is due to the high amount of liquidity in the market, but that German and Spanish issuance attracts different demand: the former more yield-oriented international investors, and the latter more domestic accounts.

The DKB lead syndicate baker confirmed that the issue was “strongly domestic supported”.

A banker noted that Commerzbank has been roadshowing a SME backed structured covered bond programme this week so he would not be surprised if that came as early as next week. Barclays, Commerzbank, Crédit Agricole and UniCredit have the mandate.