Deutsche attracted Eu1.1bn of orders for a Eu750m eight year Pfandbrief today (Tuesday), the pricing of which was not affected by negative headlines surrounding the bank, according to bankers, who said the strong investor response reflected covered bonds’ resilience. UOB is expected with a euro debut tomorrow.

Deutsche Bank’s new issue, its first benchmark Pfandbrief since August 2012, comes after substantial volatility in the German issuer’s shares and senior spreads, following concerns regarding the bank’s ability to pay coupons on its Additional Tier 1 (AT1) bonds. Deutsche’s covered bond spreads have meanwhile remained stable.

Deutsche announced a mandate for the euro-denominated benchmark eight year mortgage Pfandbrief yesterday, on the same day as announcing initial results of a tender offer to repurchase up to $2bn of the bank’s dollar-denominated senior unsecured issues, with $740m tendered by investors. This came after Deutsche last Tuesday bought back Eu1.27bn of its euro senior debt.

“Deutsche’s senior spreads and AT1s were under a lot of pressure in January,” said a syndicate official away from the leads. “But the tender offer has helped boost sentiment around the issuer.”

Deutsche leads Commerzbank, Deutsche, Natixis, NordLB and Swedbank launched the deal this morning with guidance of the 5bp over mid-swaps area, before revising guidance to the 3bp area. The deal was then re-offered at 2bp, and the size fixed at Eu750m, with the book closing at Eu1.1bn.

“It’s a strong response,” said the syndicate official. “Eu1.1bn books are solid, and they have tightened nicely.”

Syndicate officials away from the leads said the deal offered a new issue premium of around 2bp, seeing Deutsche’s June 2022s at minus 2bp, bid, which they said is in line with the premiums offered on recent Pfandbriefe.

They also noted that recent six and seven year triple-A rated German Pfandbrief supply had mostly been priced between minus 1bp and plus 1bp, and was seen quoted at around re-offer.

Syndicate officials said this implied the pricing of the deal was not affected by the concerns around the credit.

“Deutsche’s Pfandbrief spreads have held stable and it seems as though covered bonds have not been impacted by this, because the issuer has not paid up more than you would expect,” said one. “Deutsche still have headlines to deal with and issues they need to solve, but they are still part of the first row of German issuers, and this result reflects that.”

Syndicate officials said that issuers from a variety of jurisdictions are continuing to monitor the market today, and said that today’s positive results for Danske (see separate article) and Deutsche Bank will likely encourage those leaving blackout periods to enter the market quickly.

“Today’s deals, and the performance of yesterday’s issuance, confirms that the market is working well,” added one. “We’ve had fairly large volumes recently and it’s good to see decent performance across the board.”

Singapore’s United Overseas Bank (UOB) today announced a mandate for an anticipated debut, euro-denominated five year benchmark covered bond, which is expected tomorrow (Wednesday), subject to market conditions. BNP Paribas, Commerzbank, DZ, HSBC, Natixis, UBS and UOB have the mandate.

The deal will be the first euro-denominated benchmark covered bond from an Asian issuer, and the second benchmark from Singapore, following a $1bn five year deal for DBS last July.

The deal had been expected, with UOB having held a series of investor meetings last week.

Fellow Singaporean bank Oversea-Chinese Banking Corporation (OCBC) has meanwhile confirmed widely-held expectations that it is working on a covered bond programme.

Settled and outstanding purchases under the European Central Bank’s third covered bond purchase programme (CBPP3) rose Eu1.831bn from Eu156.162bn to Eu157.993bn in the week to last Friday, according to ECB figures released yesterday. The week’s growth is an increase on the previous week, when the portfolio grew Eu1.031bn, with the rebound attributed by analysts to a pick-up in new issuance. Six issues totalling Eu3.75bn settled in the latest reporting period – up from one the previous week – and analysts estimated just over Eu1bn of this was bought by the Eurosystem, meaning that secondary market buying slowed to an average of Eu166m or less per day.