Helaba priced its first new benchmark covered bond of the year yesterday (Monday), a Eu1bn five year, with an official at the issuer citing calmer market conditions following a volatile period earlier in the month as influencing the timing of the deal.

Helaba, Frankfurt

The transaction is the largest benchmark German Pfandbrief since January 2013, when Berlin Hyp launched a Eu1bn five year mortgage issue. Helaba’s deal generated more interest than any other German Pfandbrief this year, with orders exceeding Eu1.8bn.

Starting with initial price thoughts of the low single-digits over mid-swaps, the deal was eventually priced at flat to mid-swaps. The deal was led by Barclays, BNP Paribas, Commerzbank, DZ Bank and Helaba.

The issuer is pleased with how the deal went, with an official at the bank saying it was a great achievement considering recent market volatility.

“It was a fast growing book,” said the official. “Within an hour we had over Eu1bn. A final book over Eu1.8bn – that’s great oversubscription.”

The issuer noted that the deal provided the right maturity and was timed well, which recent volatile markets made difficult.

“We have always been very careful in choosing timing and pricing,” she said. “Market conditions were calmer last week and after talking to the leads and no negative headlines over the weekend we decided to go ahead.”

Syndicate officials away from the leads said that a generous new issue premium was offered at the initial stage, and a syndicate banker on the deal described the need to attract investor interest from the very outset.

“It’s not that easy with a trade that’s pricing rather expensively, i.e. flat to swaps, to bring those books up to speed,” he said. “So I think the idea was that we’d rather be a little more on the generous side to get the ball rolling.”

The order book closed with 110 accounts involved. Germany took 76.7%, Asia 5%, France 4.3%, the UK 3.9%, the Nordics 3.7%, the Benelux 1.7%, Austria and Switzerland 1.4%, and others 3.3%.

Banks were allocated the bulk of the bonds, with 62.9%, funds 24.5%, central bank and agencies 9.9%, insurance and pension funds 2.4%, and others 0.3%.