Helaba issued a dual tranche euro benchmark today (Tuesday), featuring Eu500m three and seven year tranches, and syndicate officials offered differing takeaways as to how market conditions might have affected the deal after the ultimate pricing was unmoved from IPTs.

Leads BNP Paribas, Citi, Deutsche Bank, Helaba, HSBC, Société Générale, UBS and UniCredit began taking indications of interest for the public sector Pfandbrief yesterday (Monday) afternoon, having set initial price thoughts at 7bp through mid-swaps for a three year benchmark and 3bp over mid-swaps for a seven year.

The price was today fixed at those levels, to the surprise of some syndicate bankers, with one expecting at least some movement given what he described as the “anything goes” mood of the market, while another said that the price reflected the level of uncertainty in the market.

“We can all understand the market is difficult at the moment, but I would say that the pricing is fair given the conditions,” he said. “The only problem with this transaction would be if the leads had told the issuer they could get some movement on the spread at those levels.”

A syndicate official at one of the leads said that they had priced in line with issuer expectations, having built an order book in excess of Eu1bn. He added that while secondary market levels, which were used as comparables, implied a new issue premium, for an issuer like Landesbank Hessen-Thüringen (Helaba) secondary market levels are less relevant than recent transactions.

“Helaba has an April 2017 trading at minus 14bp, indicating a clear new issue premium, but no-one would expect to buy at that level in primary,” he said. “For the seven year, a recent Berlin Hyp trade which was priced at 5bp over is indicative of where we should be pricing, so to come 2bp through that shows that the transaction has performed well.”

Berlin Hyp priced the Eu500m seven year mortgage Pfandbrief on 14 April.

The lead syndicate official added that Helaba is well known, and respected.

“It is important to go out with an appropriate price for a German issuer of this quality,” he said. “You want almost the opposite of peripheral trades; you don’t want to be reining the price in. The issuer is pleased with the deal.”

Market conditions did not affect the outcome, according to the lead banker, who said that the current market conditions are not really a relevant factor for an issuer of Helaba’s stature.

However, a syndicate official away from the leads said that current market conditions need to be properly assessed to determine whether “the blip” on Thursday and Friday was just “a small break or a new trend”. He added that it was perhaps fair to say the leads had been over-optimistic with the levels.

“It has been a long time since we have needed to think about what is going on in the market,” he said. “But until we’ve had enough time to pinpoint a clear turnaround, issuers must know that there has been something of a pricing power turnaround, as made evident by this transaction.”

This view was countered by another syndicate banker, who said that the “wobble” in peripheral markets was not relevant to covered bonds and was rather a concern for government bonds and senior unsecured transactions.

“This is made apparent by the Kutxabank pricing, where they got what they wanted without the need to overcome any major hurdles in the process,” he said. (See separate article for more on Kutxabank.)

As for future issuance, syndicate bankers seemed uncertain as to how the week would fare. A syndicate banker said that any new issuance this week would be opportunistic.