WL Bank launched a Eu500m 12 year Pfandbrief today (Wednesday) that was ultimately priced in line with initial price thoughts and guidance, with a banker at one of the leads acknowledging some pushback from investors. Swedbank meanwhile sold a well received £500m FRN.

Westfälische Landschaft Bodenkreditbank leads Deutsche, DZ, HSBC, NordLB and WGZ launched the Eu500m no-grow 12 year mortgage Pfandbrief with initial price thoughts of mid-swaps minus 8bp-7bp, a range that was maintained for guidance, before the re-offer was set at minus 8bp.

A syndicate official at one of the leads, while saying the deal went OK, acknowledged that it was “a tough trade”.

“I had anticipated it was a minus 8bp or minus 7bp sort of outcome, but I thought we might have been able to tighten a little more than that,” he said.

“There was a bit more of a pushback from investors,” he said. “In 12 years investors are looking for more of a concession now.”

The lead syndicate official added that while it is unusual in recent trades to see a German Pfandbrief print in line with initial price thoughts and guidance, among Länder bonds it is more common.

“Given this yield environment there may just be less room for tightening, especially at the long end of the curve,” he said.

The lead syndicate official saw fair value for the trade at around 10.5bp, noting that Deutsche Kreditbank March 2027 paper was trading at minus 9.5bp, mid, while Münchener Hypothekenbank March 2025 paper is trading at minus 9bp.

He said that while WL Bank’s own outstandings might suggest fair value for the new issue was around minus 14bp-13bp, such comparables were artificially tight.

A syndicate official away from the leads put fair value at around minus 11bp to minus 10bp, also citing MünchenerHyp’s recent trade, adding that minus 8bp seemed generous.

“It is hard to say why it did not go tighter,” he said. “Is it the quality? No, it shouldn’t be, WL Bank are one of the good names. Is it the tenor? A 12 year should for them be doable.”

The syndicate official suggested instead that the result may be caused in part by the quantity of supply from WL Bank, which for example sold a Eu500m 15 year Pfandbrief in November.

Bankers said that some issuers were monitoring the market ahead of possible issues, but said the outcome of WL Bank, wider market conditions, and approaching Easter holidays may persuade some to hold off.

Swedbank Hypotek meanwhile sold a £500m three year floating rate note in sterling. Leads Nomura and RBC went out with IPTs of the 22bp area for a benchmark-sized issue and priced the FRN at Libor plus 20bp on the back of a £650m order book.

A syndicate official away from the leads said the outcome was a great result for Swedbank. He said that after heavy supply at the start of the year there was some fatigue in three year sterling FRNs. Deals that were launched at 18bp-19bp over were still quoted at around that level, he added, although he had not expected the 20bp level to be hit given that “it is increasingly hard to actually get a trade done”.

A syndicate official at one of the leads said he was pleased with the result.

“The market is tricky,” he said. “You feel you have the right name at the right price, but you can’t judge the depth of demand until you actually go out with it.”