Commerzbank launched the first euro benchmark covered bond since the Brexit referendum today (Monday), a twice-subscribed Eu750m eight year Pfandbrief that bankers said may encourage other issuers to enter the market before the summer period, while MünchenerHyp tapped April 2026s.

In the wake of the UK’s vote to leave the EU many market participants had expected the covered bond market to remain closed until after the summer holiday period, and no issuance emerged at the start of last week as markets remained volatile. However, after conditions stabilised and sentiment recovered, Santander UK launched the first benchmark covered bond to follow, a £500m three year FRN on Friday, and hopes for a reopening of euros rose.

Commerzbank’s deal today is the first euro-denominated benchmark financials issuance since before the referendum.

Leads Commerzbank, Credit Suisse, LBBW, Natixis and SEB launched the eight year mortgage Pfandbrief with guidance of the flat to mid-swaps area. The spread was then fixed at 4bp through and the size at Eu750m, with the book closing at over Eu1.5bn.

Syndicate officials said Commerzbank’s deal offered a new issue premium of around 3bp, seeing the German issuer’s January 2022s at minus 9bp, mid, and June 2026s at minus 6bp. They noted this was larger than premiums offered by comparable deals before the market closed ahead of the referendum.

“It looked pretty generous at first,” said a syndicate official away from the leads. “But given the market backstory, that was probably the right thing to do, and to tighten the spread by 4bp is a good outcome.”

A syndicate official at one of Commerzbank’s leads said the deal offered a slightly higher premium partially as it is the first euro benchmark since the vote and also to compensate for a prevailing low yield environment.

Bund yields hit record lows following a post-Brexit flight to quality last week, with the 10 year Bund yield remaining in negative territory. Eight year Bund yields were at minus 0.35% this morning.

“The rates market collapsed post-Brexit with the safe haven bid in Bunds and everything, so with that you need to offer a little bit more just to get to a sensible yield or coupon number,” said the lead syndicate official.

The new issue was priced with a yield of 0.095% and a coupon of 0.05%, which is the smallest ever coupon for a deal with a maturity of eight years or longer, according to syndicate officials.

“Overall, it’s a great result,” the lead syndicate official added. “I think everyone is going to be reconsidering their plans after this deal has gone so well.

“For a German Pfandbrief, which obviously offer the least yield and spread, to get a result like this will encourage some other issuers that there is a good window before the summer, and for me the time to go is now.”

Other bankers agreed, although some said that supply will likely still be modest this week given that many issuers are well advanced with their funding plans while some are set to enter blackout periods.

“We’re probably ahead of schedule, but it’s not too surprising Commerzbank has gone well,” said one. “There’s good appetite for high quality covered bonds right now, whether that’s from bank treasuries given all the liquidity injections, or from non-bank treasury investors who are still concerned about this environment and are looking for safe haven assets.

“However, I wouldn’t expect a huge amount more, as this week is still quite challenging from a calendar perspective.”

Bankers added that any further covered bond supply from core issuers will likely be focussed into longer maturities, given the low yield environment.

Münchener Hypothekenbank leads DZ, HSBC, LBBW and UniCredit reopened the Eu500m April 2026 mortgage Pfandbrief this morning for a tap size of Eu250m, skipping a guidance stage to announce the deal with a fixed spread of 8bp through mid-swaps.

The book stood at Eu280m, including Eu80m of JLM interest, at the last update.

The deal was first priced at 1bp through mid-swaps on 11 April, and quoted at 9bp, mid, this morning.