Deutsche Hypo today (Monday) reopened the euro benchmark market with a Eu500m seven year that attracted Eu1.9bn of demand and was wrapped up in an hour. La Banque Postale is set to launch a deal of the same size and tenor tomorrow, and further deals are said to be imminent.

Deutsche Hypothekenbank’s new issue is the first euro deal since a Eu500m six year UniCredit AG deal was launched on 31 March.

Leads BayernLB, Commerzbank, Crédit Agricole, DZ and NordLB launched the Eu500m no-grow seven year mortgage Pfandbrief with initial price thoughts of the 10bp through mid-swaps area, then moved to guidance of the minus 12bp area with IOIs over Eu1bn. The re-offer was set at 14bp through on the back of books of Eu1.5bn, with the final order book totalling Eu1.9bn.

“It went extremely well,” said a syndicate official at one of the leads, noting that the execution was completed in one hour and citing high granularity for the order book.

A banker away from the leads agreed.

“It certainly enjoyed a strong reception,” he said.

The lead syndicate official suggested the deal offered a 5bp new issue premium based on the issuer’s secondary curve, noting that such a premium is in line with those offered by recent trades.

A syndicate official away from the deal put fair value at minus 17bp, seeing the issuer’s July 2019 paper trading at minus 21bp-20bp, mid.

While acknowledging its success, another syndicate official away from the deal said that Deutsche Hypo is not the strongest of German names. He noted that the issuer had some exposure to Heta Asset Resolution, though he said this was perhaps not so relevant to its covered bonds.

“I think maybe the IPTs of minus 10bp therefore offered a bit of a sweetener,” he said.

The lead syndicate official said the leads were mindful of the issuer’s Heta exposure and rating, but insisted these factors had little impact on the deal. Deutsche Hypo’s mortgage Pfandbriefe are rated Aa2 by Moody’s.

“In this context of yields and spreads, people are not making that much of a difference between issuers,” he said.

La Banque Postale is expected to launch a Eu500m no-grow seven year deal tomorrow (Tuesday), after having this morning announced a mandate with leads HSBC, ING, LBBW and Natixis.

Bankers said they expected the deal to go well after the issuer’s relative absence from the market. La Banque Postale’s last benchmark covered bond was a Eu750m 10 year launched in January 2014.

“They are a fine name and they have not been in the market for a while, so I am quite relaxed about it,” said a syndicate official at one of the leads.

“This deal is about keeping their presence as an issuer, and given where yields and the market are at the moment it makes sense for them.”

The lead syndicate official saw the issuer’s January 2024 paper trading at 10bp through mid-swaps, bid, and December 2020s at minus 13bp, estimating that fair value for the new deal is around minus 11.5bp.

“It is one of the top, top quality names in France so it should go well, especially at that size,” added a syndicate official away from the deal.

Meanwhile, bankers said they expected more mandates to be announced by core issuers either on Monday afternoon for Tuesday execution or on Wednesday afternoon, after an ECB meeting, for Thursday execution.

“There are a couple of peripherals looking, but I don’t think that’s likely,” said one syndicate official.

Another agreed, adding that he expects shorter dated supply from an issuer from the Netherlands.

“This is now clearly a supportive market,” he said.