Deutsche Pfandbriefbank priced the longest dated benchmark covered bond of the year today (Wednesday), a rare 15 year Pfandbrief that was targeted at satisfying a 2.5% yield bogey for investors. Meanwhile, WL Bank has mandated a seven year benchmark.

WL Bank’s mortgage Pfandbrief is slated for launch and pricing in the near future via leads BayernLB, DekaBank, DZ Bank, HSBC and WGZ.

Until today the longest dated benchmark covered bonds this year were 12 year deals, launched by issuers such as Caisse de Refinancement de l’Habitat and Intesa Sanpaolo. BayernLB sold a Eu500m 10 year issue in the middle of April, which was the longest dated German Pfandbrief this year until today’s deal for Deutsche Pfandbriefbank (pbb).

The issuer has priced the Eu500m public sector backed deal at 40bp over mid-swaps via leads BNP Paribas, Commerzbank, Deutsche Bank, LBBW and JP Morgan. The transaction was marketed with initial price thoughts of the low 40s before guidance was set at 40bp-42bp over. According to a syndicate banker “well over” Eu1bn of orders were placed, with 61 accounts involved.

The 15 year maturity is unusual, but was decided upon after discussions with investors yesterday when the mandate was announced, said the syndicate official, with the issuer happy to achieve some duration.

At the time of these discussions a 2.5% coupon was feasible, he said, but rates fell today. In the end the deal was priced with a 2.375% coupon to offer a re-offer yield of 2.487%, just shy of a 2.5% yield bogey.

Foreign accounts took more than half of the bonds, with Germany allocated 43.6%. Italy took 20%, the Nordics 15%, Austria 11.7%, the UK and Ireland 6.3%, Switzerland 1.1%, France 0.9%, and others 1.4%. Insurance companies were allocated 49%, banks 28.2%, and funds 22.8%.

“The deal went really well,” said the lead syndicate official.

Syndicate bankers away from the leads echoed this assessment, saying that the transaction was solid and that the long maturity allowed the issuer to offer an attractive coupon that appeals to insurance companies in particular.

“It looks like it went relatively well,” said one. “They had more than Eu700m of orders early this morning.”

Another syndicate banker away from the leads said that it was not surprising to see pbb moving further down the curve after it sold four year and seven year issues earlier this year. However, he said that a 15 year maturity is rare for Pfandbriefe.

“The pricing will have been driven by the absolute level rather than working off the issuer’s curve,” he said. “The idea is to achieve an eye-catching coupon.”

Pbb’s 1.5% March 2020 is trading at around 18bp over after having been launched at 25bp over two months ago, he said, and the issuer’s 0.875% January 2017s from earlier this year are around 4bp after having been re-offered at 8bp over.