Commerzbank priced a Eu500m seven year mortgage Pfandbrief debut yesterday (Thursday) to round off a year in which it has inaugurated three covered bond programmes, although this week’s exercise was perhaps its least taxing, according to an official at the issuer.

Franz-Josef Kaufmann, Commerzbank

Franz-Josef Kaufmann, deputy head of capital management and funding at Commerzbank, said that the mortgage Pfandbrief was somewhat easier than its earlier trades this year. These included a ground-breaking Eu500m SME-backed structured covered bond in February and a Eu500m inaugural benchmark public sector Pfandbrief in June.

“If you take the other transactions, there were certain challenges in explaining them,” he told The Covered Bond Report. “With the SME trade there was a lot of noise and the preparation was also a lot of work. On the public sector Pfandbrief we had to explain the export credit element – even if it the guarantees are pretty clear it is something new for investors.

“A German Pfandbrief backed by retail mortgages is probably something people understand from the very start. We had no specific roadshow for the programme as we felt that it was not necessary, and the result showed that this was right.”

However, Kaufmann said that the mortgage Pfandbrief programme had taken some time to prepare before it could be inaugurated.

“Preparing to become a Pfandbrief issuer takes quite a while,” he said, “getting the infrastructure in place and complying with the regulatory and legal requirements. There is also a bit more work necessary on the residential mortgage side where you have thousands of loans in the cover pool.

“We had finalised everything by early this month and were ready to issue,” he added. “We felt the market was in a constructive and so decided to go ahead – also bearing in mind that our financial calendar, with results being due in early November.”

Leads Commerzbank, Deutsche Bank, Natixis and UniCredit built a book of more than Eu1.2bn for the Eu500m no-grow new issue yesterday morning after having gone out with initial price thoughts of mid-swaps plus the mid-single-digits and then official guidance of mid-swaps flat to 1bp over. The deal was priced at mid-swaps flat.

“We had strong interest, with good bookbuilding and quite quick execution at the end of the day,” said Kaufmann. “So we are very happy with the process and the outcome.”