MünchenerHyp is pricing a three year dollar Pfandbrief today (Tuesday), while Commerzbank attracted over Eu1bn of orders for a Eu500m tap, and bankers said the German issuers – each making their second appearance this month – show there to be pre-summer opportunities.

Münchener Hypothekenbank’s new issue is the first US dollar-denominated benchmark covered bond since the markets closed in the run-up to the UK’s Brexit referendum, with the last having been a $1.5bn five year for Bank of Montreal on 8 June. Before the pause in issuance, bankers had noted that the US dollar market was looking more attractive for issuers, with spreads tightening and pricing almost on a par with euros.

After announcing a mandate for MünchenerHyp’s three year Reg S mortgage Pfandbrief yesterday (Monday) afternoon, leads Barclays, Deutsche, DZ, Goldman Sachs and Nomura launched the deal this morning with initial price thoughts of the low 50s over mid-swaps. The spread was then fixed at 48bp on the back of books in excess of $800m (Eu724m).

The deal is the tightest-priced dollar covered bond of the year, coming inside a $650m three year Pfandbrief for LBBW that was priced at 51bp on 18 May.

“I thought that, as a rare name in the dollar space, MüHyp would do well to price the deal tighter than 50bp,” said a syndicate official away from the leads. “It’s is a good result, and looks to have attracted respectable demand.”

Syndicate officials said the deal offered a new issue premium of around 5bp, seeing LBBW March 2018s and May 2019s at 34bp and 41bp, mid, respectively, pre-announcement. They also cited BayernLB April 2018s at 37bp.

Syndicate officials said the final spread of 48bp was equivalent to a euro spread of around 10bp through mid-swaps.

“It’s a good price, and obviously with yields so low, accessing euros in this part of the curve would have been challenging,” said one.

Bankers noted that although yields had risen slightly today they are still close to historical lows, with the 10 year Bund yield at minus 0.12% this morning, up from a low of 0.20% on Monday.

The deal is MünchenerHyp’s first benchmark US dollar covered bond since 2012, when it sold a $500m (Eu452m) July 2015 issue.

“Dollar supply has been rather light,” said a syndicate official, “and given how deeply the negative the Pfandbrief curve is in euros, this market is a good alternative for those German issuers who can use it.”

Today’s dollar issue comes after MünchenerHyp tapped by Eu250m to Eu750m an April 2026 issue on Monday of last week (4 June), the day on which Commerzbank launched the first new euro benchmark since the UK Brexit referendum, a Eu750m eight year mortgage Pfandbrief.

Commerzbank returned to euros this morning to tap a June 2026 mortgage Pfandbrief, with no other issuers having accessed the market in the interim, despite bankers deeming conditions suitable for pre-summer break issuance given a relatively stable market, with a lack of supply and ECB asset purchases providing a supportive backdrop.

Leads BNP Paribas, Commerzbank, HSBC, NordLB and Santander reopened the Eu500m issue with guidance of the 3bp through mid-swaps area. The spread was then set at minus 5bp and the tap size at Eu500m, taking the deal to Eu1bn, on the back of books “well above” Eu700m. The book the closed at 10:30 CET at over Eu1bn.

“It is a good deal and got very good demand, but I think that is a reflection of what we have seen in the market in the last few days,” said a syndicate official at one of the leads. “The primary market is very supportive, secondary markets look very good, and there is no competing supply out there at all.

“The market is still offering these great opportunities.”

The original Eu500m issue was priced on 2 June at 3bp through mid-swaps. Syndicate officials said the tap offered a premium or 2bp-3bp, seeing the bond trading at around minus 8bp, mid, pre-announcement.

Bankers said that the historically low yields mean that euro-denominated covered bond issuance will likely be limited to the longer end of the curve, and said that with Commerzbank having sold two new longer dated benchmarks in recent weeks, reopening one of the existing trades rather than returning with a third was a sensible move.

“But for other issuers that have not been active in the 10 year tenor recently, I think a new benchmark could get a welcome reception,” said a syndicate official.

ECB figures released yesterday afternoon show that settled and outstanding purchases under the third covered bond purchase programme increased Eu530m, from Eu183.570 to Eu184.100m, in the week to last Friday.

In the previous reporting period the CBPP3 portfolio grew by a net Eu582m, although the gross increase came to Eu1.212bn when Eu100m of redemptions and a quarter-end amortisation adjustment of Eu530m are taken into account.

Portfolio redemption figures for last week that will give a clearer picture of CBPP3’s development will be published this afternoon.