NordLB is taking orders on a $1bn (Eu725m) long five year public sector Pfandbrief today (Tuesday), the first covered bond in the US market for a month, while the euro benchmark market was quiet, with a Eu125m tap for Berlin Hyp the only supply this morning.

NordLB, Hannover

NordLB finished a roadshow for its new issue last Thursday, after having announced its plans and embarked upon the marketing exercise two weeks ago. The 144A deal is NordLB’s second, following a $1bn three year debut in October 2012.

“The feedback on the roadshow was positive and constructive, so our view was that there’s no time like the present,” said a syndicate official at one of the leads.

Another banker involved in the $1bn no-grow deal said that the books are developing well on the basis of initial price thoughts of the 53bp over mid-swaps area. The leads are Bank of America Merrill Lynch, Barclays, Credit Suisse, Goldman Sachs and HSBC.

The last US dollar benchmark covered bond was a $2bn five year issue for Royal Bank of Canada on 25 September, while the last European supply in dollars was a $1.5bn five year SEB transaction in May.

Berlin Hyp’s increase was to a Eu1bn five year mortgage Pfandbrief that it first sold at the end of January. With pricing of 1bp through mid-swaps, the deal initially proved a tough sell.

Leads Commerzbank, Crédit Agricole, JP Morgan, Landesbank Berlin and UniCredit today priced the Eu125m tap at 9bp through mid-swaps.

“We are quite happy with it,” Bodo Winkler, head of investor relations at Berlin Hyp, told The CBR. “There was a lot said about the jumbo, but at the end of the day it performed well and we were asked if we could increase it.

“So that was confirmation for us that ultimately the deal wasn’t so bad.”

The leads took some Eu150m of orders, mainly from domestic German accounts, after having taken indications of interest at the minus 9bp level yesterday (Monday) afternoon. A syndicate official at one of the leads said that the outstanding paper was bid at around 10bp through when the tap was announced.

“The process went really smoothly,” said Winkler. “There was real demand for this issue and when we were asked by the leads if we could tap the deal we were willing to do this as we had enough cover assets to do so.

“From a liquidity perspective we didn’t need it at all and it was only a small tap,” he added. “We are almost fully funded for the rest of the year, so nothing much should be expected from Berlin Hyp for the remainder of 2013.”