Deutsche Kreditbank sold a Eu500m no-grow 12 year mortgage Pfandbrief at 9bp through mid-swaps today (Thursday), with German accounts faced with a lack of supply cited as the transaction’s driving force. Meanwhile, Aareal sold a $500m four year inaugural dollar benchmark.

Deutsche Kreditbank leads BayernLB, Commerzbank, DZ, Natixis and NordLB launched the Eu500m no-grow 12 year mortgage Pfandbrief with initial price thoughts of the mid-single digits through mid-swaps area, before tightening to guidance of 8bp through after having attracted IOIs of over Eu500m, excluding CBPP3 interest. The re-offer was then set at minus 9bp, with the leads building having built a total order book of over Eu800m.

A syndicate official at one of the leads said this was a good result for DKB.

“They are not the most regular issuer, so their investor universe is slightly limited, and 12 year Pfandbriefe are not exactly a well trodden path, so to build a book of over Eu800m is a good conclusion, all things considered,” he said.

“DKB have sometimes found it harder to get deals done, so this is very nice to see. Of course they were helped by the state of the market, but it is a well-deserved result.”

A syndicate official at another of the leads agreed.

“It is a typical Pfandbrief with typical Pfandbrief investors,” he added. “Minus 9bp might seem tight, but I think the oversubscription in the order book shows the price is justified.”

Banks took 28% of the deal, asset managers and funds 28%, central banks 27%, and co-operatives and savings banks 17%.

The lead syndicate official also noted that the book was German-driven, with 85% of the deal being allocated to accounts in Germany.

“It is true that these investors are slightly limited in what they can buy, what with the supply of Pfandbrief and other deals,” he added, “and so some of them are being forced to buy whatever they can, but they were clearly comfortable at this level.”

He said that the deal offered a pick up versus DKB’s curve, noting that the issuer’s June 2024 paper was trading at minus 17bp, mid.

A syndicate official away from the leads agreed, putting fair value for the deal at minus 12bp.

“Minus 9bp is a great print,” he added.

Aareal Bank leads Citi, Credit Suisse, Goldman Sachs and LBBW launched the $500m (Eu449m) no-grow four year Reg S mortgage Pfandbrief with initial price thoughts of the 35bp over mid-swaps area, a level which was maintained as guidance, and the re-offer was fixed at 35bp over.

The deal is the issuer’s inaugural dollar benchmark. It comes after Landesbank Baden-Württemberg issued a $500m three year Pfandbrief at 27bp over on 26 February.

“Because this was Aareal’s first foray into the dollar market it was a bit of a trial and error process, but we are happy with the result,” said a syndicate official at one of the leads. “We were held to account by some of the investors on the price, but at 35bp the level made sense for the issuer and so there was no discussion to be had.

“It was certainly an interesting trade,” he added.

Bankers meanwhile said they expected a quiet end to the week in the covered bond market, noting that many issuers are focussing on senior and capital trades.

“It’s not a question of demand,” said a syndicate official. “The demand is clearly there. But most of the issuers who were looking at coming to the market are done now.

“I think many issuers are looking at building their capital buffers and taking advantage of the hot market for bank capital, which might not be around in a couple of months, whereas the covered bond market has always been more resilient,” he added.