Deutsche Pfandbriefbank (pbb) sold its second euro benchmark covered bond of the year yesterday (Tuesday), a Eu500m five year, and an official at the issuer said that ambitious lending targets will drive a “high level” level of funding activity and that it is very pleased with its latest deal after its last fell short of expectations.

Leads DekaBank, DZ Bank, Natixis, NordLB and UniCredit priced the Eu500m no-grow transaction, a mortgage Pfandbrief, at 14bp over mid-swaps on the back of more than Eu1.1bn of orders.

That compares with a Eu500m no-grow eight year Hypothekenpfandbrief priced at 17bp over on 21 January, which met with more than Eu500m of orders.

For pbb’s latest deal the leads set initial price thoughts at the mid to high teens over, and then guidance at the 15bp over area.

Pbb is only the second issuer so far to have priced two euro benchmark covered bonds this year, with Credit Suisse the other.

Götz Michl, head of funding and debt investor relations at pbb, said the bank has ambitious lending targets for 2014 and the issuer will therefore “continue our funding activities on the high level that you saw last year”.

Pbb raised some Eu2.45bn of funding via four benchmarks and some taps in the euro market last year, also tapping the sterling covered bond market and borrowing in the senior unsecured market.

Plans for a second euro deal this year became more concrete last week, according to Michl, with the issuer confident that there was a window of opportunity for it “despite a certain level of uncertainty which is in the market right now”.

“We are very pleased with the outcome of yesterday’s placement,” he added. “We saw strong demand in the order book from a variety of investors and we were able to issue the Pfandbrief at a reasonable new issue spread of 14bp.

“We already observed a good performance of the Pfandbrief in the secondary market.”

The bonds were trading at 10bp over this morning (Wednesday), according to a syndicate official at one of the leads.

Some syndicate bankers away from the deal had said that the spread was attractive, and a banker at one of the leads yesterday said they had taken a cautious approach to ensure a positive reception, including because of the issuer’s plans to be in the market on a frequent basis.

Pbb’s Michl said that the issuer’s January transaction “certainly” did not meet its expectations, and that the tenor or the timing may have been an issue, but that pbb wants to be a “constant issuer”.

More than 80 accounts participated in yesterday’s transaction. Germany took 77%, the Nordics 4%, the Benelux 3%, Italy 3%, Asia 4%, the UK and Ireland 4%, Austria and Switzerland 3%, and others 2%.

Banks were allocated 45%, asset managers 43%, insurance companies and pension funds 7%, central banks 4%, and others 1%.