UniCredit Bank AG today (Tuesday) built an almost three times oversubscribed book for a Eu500m six year mortgage Pfandbrief in a swiftly executed deal, with bankers citing the shorter maturity than recent issuance as a key factor in its success.

Leads BayernLB, Crédit Agricole, DZ Bank, NordLB and UniCredit launched the Eu500m no-grow six year mortgage Pfandbrief with initial price thoughts of the 10bp through mid-swaps area, then opened at 9.40 CET with guidance of the 12bp through area and indications of interest at more than Eu750m.

The re-offer was then set at 14bp through on the back of books of more than Eu1bn, before the books were closed at 10.20 CET at Eu1.4bn.

Syndicate officials away from the leads said the deal was a success, citing the size of the order book and the speed of the execution.

“It was well executed, well priced and well covered,” said one.

A syndicate official at one of the leads suggested the deal had gone well because the issuer had opted for the right maturity, noting that a seven year trade from Aktia Bank and a tap of a seven year Commerzbank deal yesterday (Monday) had gone well while deals with maturities of more than 10 years had underperformed in recent weeks.

“In this market it depends on getting the right maturity range and on the jurisdiction,” he said.

A syndicate official away from the deal agreed.

“The longer end of the curve has perhaps been overdone,” he said, “and falling yields have hit those bonds harder.”

Bankers away from the deal said it appeared to offer a generous new issue premium, with one seeing UniCredit April 2024 paper trading at around minus 17bp, mid, and suggesting that fair value for a new six year should be around minus 16bp.

The lead syndicate official put the new issue premium at around 4bp, seeing UniCredit April 2020 paper at minus 20bp, mid, and its April 2024 at minus 14bp, mid. Another banker away from the leads agreed, also seeing fair value at around minus 18bp.

The lead syndicate official noted that, with a yield of 0.159%, the deal offered a 25.1bp pick-up over the 2.5% January 2021 Bund, although he added that the issuer chose to go with a six year issue to fit its funding needs rather than to offer a more attractive yield.

Banks took 53% of the deal, central banks 25%, fund managers 16%, insurance companies 4%, and other investors 2%. Investors in Germany were allocated 78%, CEEMEA 6%, Asia 4%, the Benelux 4%, Switzerland 3%, Italy 2%, Austria 1%, Iberia 1% and other jurisdictions 1%.

Meanwhile, bankers said further new issues from core jurisdictions could not be ruled out ahead of Easter holidays at the end of the week, with one suggesting French issuers might be the most likely to come to market.

Another syndicate official said he expected the market to be calm this week, after having been particularly soft over the last few weeks but, citing a Commerzbank tap that yesterday (Monday) achieved the issuer’s maximum Eu500m size, noted deals could still be successful if they offer a decent new issue premium.