LBBW launched the first true benchmark euro covered bond in four weeks yesterday (Tuesday), attracting over Eu2.1bn of demand to a Eu750m five year mortgage Pfandbrief, and an official at the issuer said the result was better than expected.

Landesbank Baden-Württemberg leads BNP Paribas, DZ Bank, LBBW, Natixis and UniCredit priced the deal at mid-swaps minus 15bp. The deal was launched with initial price thoughts of the minus 11bp area before guidance was set at the minus 13bp area.

The deal was the first true benchmark euro covered bond in four weeks, and was launched into a potentially narrow issuance window between a positive outcome to Greek negotiations early Monday morning and a deadline for Greek implementation of initial agreement measures today (Wednesday) and an ECB meeting on Thursday.

Jörg Huber, head of funding and investor relations at LBBW, said the issuer had been confident that the market was in good enough shape to absorb a new issue after holding discussions with investors, and saw an opportunity to get its deal away.

“Certainly the markets were shaky over the last few weeks, but since there was over the weekend some sort of compromise found in the Greek crisis, we were more confident in the market overall,” he said. “We also knew there is quite a lot of money there which investors needed to invest and so were we confident that the market could absorb a transaction.

“If you see a window and you are ready, there is no need to wait. There are so many things happening on a day to day basis now that windows open and close, and for the last couple of weeks the market was completely shut, so one should not sit and wait hoping that it gets better. We were quite confident that we could get a good transaction done but this outcome is even better than that.”

Huber cited the level of pricing achieved as a particular success, stating that the deal offered a concession of between 2bp-4bp, which is in line with premiums offered before recent market volatility.

“We are very happy with that,” he said. “We could have stretched the price a bit further, but we thought at this level the deal was sufficiently oversubscribed and had some room to perform in the secondary market.”

He added that the issuer was also satisfied with the level of demand.

Over 70 accounts participated in the trade, with banks allocated 45.3%, central banks 22.1%, asset managers 19.4%, corporates 4.7%, insurance companies and pension funds 3.9%, and others 4.6%. Accounts from Germany took 64.8%, the Nordics 10.3%, Austria, Switzerland and Liechtenstein 7.2%, the Middle East 4%, the UK and Ireland 3.6%, CEE 2.8%, Asia 2.7%, the Benelux 1.6%, southern Europe 1.2%, and France 0.3%.

Huber said that the issuer does not have plans for further covered bond benchmarks this year, having issued two in euros and one in dollars.

“We don’t have specific targets with regards to further covered bond issuance this year,” he said. “Depending on the development of our private placements, we will decide in the course of the year whether we will be looking at the market in the benchmark format again.”