MünchenerHyp today (Wednesday) showed that the covered bond market remains open as an anticipated summer lull approaches, printing a Eu750m long five year deal, but bankers differed over whether declining oversubscription levels in this week’s trades show demand for new issues is falling.

Münchener Hypothekenbank’s deal, which was announced yesterday (Tuesday) afternoon, followed three well-received euro deals from Bankia, LBBW and Bank of Montreal that bankers yesterday said demonstrated the strength of the market.

Leads Commerzbank, DZ Bank, NordLB and WGZ launched the Eu750m long five year mortgage Pfandbrief with initial price thoughts of the mid-swaps minus low to mid-teens area, before moving to guidance of the 16bp area with orders at Eu500m excluding the Eurosystem. The re-offer was then set at minus 17bp on the back of books approaching Eu1bn including the Eurosystem. The final order book size was not disclosed at the time The CBR went to press.

Syndicate officials away from the leads said the deal had gone well and, accounting for the differences in size and maturity, had printed roughly in line with a Eu500m seven year LBBW issue sold yesterday at minus 16bp.

“It’s a good result,” said a syndicate official, “well-executed, and pretty much a textbook transaction.”

Some bankers away from the leads said the new issue showed the market was still there for further deals while the summer break kicks in.

“They found good traction, and they’ve demonstrated that deals are still going well even into the summer break,” said one. “After everything, it’s been a very strong finish to the first part of the year.”

Another syndicate official suggested more issuers could be encouraged to tap the euro market tomorrow (Thursday) by MünchenerHyp’s result.

“As long as deals like this one keep going well you will see more popping up,” he said. “But the second things start feeling a bit slower in terms of investor momentum we will see less activity for the next two or three weeks.”

However, other syndicate officials away from the deal said that recent trades showed demand for new issues might be declining, noting lower oversubscription levels versus comparable issues sold last week.

“What we are seeing now is that the opportunistic accounts that were involved in the first trades after the market reopened are mostly gone away,” said a syndicate official at one of the leads on yesterday’s LBBW trade.

“Now, for these deals and at these tighter levels, it’s just the bank accounts, the traditional Pfandbrief buyers and the usual suspects that are coming to the market, and things look like they are slowing down.”

Syndicate officials said the deal offered a new issue premium of around 3bp-5bp, stating that all five year German Pfandbriefe are trading in the area of minus 22bp-21bp.

The deal is MünchenerHyp’s third euro benchmark covered bond of the year, following a Eu750m 10 year in May and a Eu750m eight year on 2 June.