Münchener Hypothekenbank increased a July 2028 mortgage Pfandbrief by Eu250m via a retention deal today (Wednesday) after uncovering strong demand for the 15 year paper, and an official at the issuer said it is delighted by how quickly the top-up was sold out.

Leads BNP Paribas, BayernLB, DZ Bank, LBBW, NordLB and WGZ Bank priced the Eu250m no-grow tap at 13bp over mid-swaps, taking the issue size to Eu750m.

A syndicate official at one of the leads said that the 13bp over level is where investor interest came together, and that the paper was around this level to slightly tighter in the secondary market.

The 2.5% 15 year mortgage Pfandbrief was first launched at 17bp over mid-swaps on 27 June. A syndicate banker away from the leads recalled that the original deal was “a bit of a struggle”, coming at the wide end of guidance, but noted that it has tightened since then, and was around 10bp/12bp over today.

The increase was priced tighter over Bunds than the initial deal, he added. At the end of June the Eu500m Pfandbrief came at 39.4bp over thee 4.75% DBR 2028, and today’s tap was priced at 37.4bp over.

He praised the issuer’s move to tap the transaction.

“It’s a great thing to do – quick and nimble,” he said. “It’s one of the rare 15 year bonds and has tightened also. The deal proves there is liquidity and the issuer gets funding.”

Claudia Bärdges-Koch, deputy head of treasury at Münchener Hypothekenbank, said that the tap was launched in response to investor demand that was initially communicated directly to the issuer via an end investor and then confirmed by the leads when the issuer approached them to investigate the potential for a transaction.

“We are in regular dialogue with investors and lead managers and the interest in a tap emerged from this,” she said. “We are wonderfully pleased by how it went. It was sold out very quickly, and people were asking for more.”

Although the level of demand would have allowed for a larger top-up, the issuer was mindful of not wanting to undermine the deal’s performance, said Bärdges-Koch.

German insurers and pension funds, which are hungry for triple-A rated paper, were the main drivers of the transaction, she added. Some of the bonds were also sold to foreign investors.