Helaba took its euro benchmark covered bond funding in 2013 to Eu2.25bn with a Eu750m four year Pfandbrief yesterday (Tuesday), with the quality of the order book and the short maturity supporting the decision to print a larger deal than the issuer’s initial target, according to a lead syndicate banker.

Helaba, Frankfurt

The mortgage backed deal was the second new benchmark Pfandbrief for Landesbank Hessen-Thüringen (Helaba) this year, after a Eu1bn dual tranche transaction in June. The issuer increased the five year tranche of that transaction by Eu500m in July.

Leads BNP Paribas, Crédit Agricole, Credit Suisse, Deutsche Bank and Helaba priced yesterday’s Eu750m issue at 5bp through mid-swaps, in line with guidance of the minus 5bp area and initial price thoughts of the mid-single digits through.

That is the joint tightest re-offer spread on a new benchmark covered bond this year, alongside the pricing of a Eu625m five year public sector Pfandbrief for Münchener Hypothekenbank in late September.

More than Eu800m of orders were placed for the Helaba Pfandbrief, with the decision to print a Eu750m deal catching some market participants by surprise, according to a syndicate banker away from the leads. That the deal did not meet with much stronger demand was to be expected given the sub-Euribor levels, he added.

A syndicate official on the deal said that the issuer’s main size target was to achieve a Eu500m issue, but that it had sufficient collateral to increase the size of the deal if justified, and that this was the case given the order book.

“There was no fluff in there,” he said.

He added that many Pfandbrief deals trade very tight despite being relatively small transactions that were only narrowly oversubscribed on launch and that this is in part because of strong support from the German-speaking retail investor community, whose orders often come through in the secondary market.

“The four year maturity is a sweet spot for the retail bid, so we had no concerns about spread widening,” he said.

The Pfandbriefe were trading at 7bp through mid-swaps this morning, according to the banker.

Germany and Austria took 64% of the bonds, France and the Benelux 17%, the UK 7%, Switzerland 4%, Asia 3%, CEEMA region 3%, and Scandinavia 2%.

Banks were allocated 62%, central banks 11%, fund managers 26%, and insurance companies 1%.