Deutsche Hypothekenbank has mandated banks for a Eu500m no-grow seven year mortgage Pfandbrief set for launch as early as Monday, with a banker involved in the deal hoping that the market is more friendly next week than it was this week.

The German issuer has retained BayernLB, Crédit Agricole, Commerzbank, DZ and NordLB to lead manage the new issue.

A syndicate official at one of the leads said that he expected the deal to be launched as soon as possible, with execution on Monday most likely.

WL Bank issued a Eu500m seven year mortgage Pfandbrief on Thursday of last week (23 May) at 1bp over mid-swaps, making it the tightest seven year benchmark covered bond to have hit the market this year.

The syndicate official said that he did not expect Deutsche Hypo to achieve quite such a tight level.

“Most likely there will be a slight differential, but not a massive one,” he said, suggesting initial price thoughts in the low to mid-single-digits over Libor. “Then we will see how far we can come down from there.”

Deutsche Hypo’s mortgage Pfandbriefe are rated Aa2, compared with a triple-A rating for WL Bank’s covered bonds, he noted.

He said that the less buoyant market is another factor likely to contribute to wider pricing.

“The market is slightly less excited about new trades,” he said, “as you could see from the contrast between the Belfius and KBC trades.”

Belfius issued a Eu500m seven year deal on Tuesday at 17bp over mid-swaps after Belgian compatriot KBC had sold a Eu1bn deal at 16bp over a week earlier.

“Things this week have been less bright than in the previous two weeks,” he added. “Neither Belfius nor National Australia Bank [which sold a Eu750m 12 year deal on Wednesday] were a great success. And it will be interesting to see how the market reacts to another seven year.

“We’ll have to hope that people come back from the weekend somewhat refreshed and ready to buy.”

Deutsche Hypo’s last benchmark was a Eu500m five year mortgage Pfandbrief issued on 15 January and priced at 1bp over mid-swaps.