Helaba is pricing a four year US dollar benchmark Pfandbrief today (Tuesday), having attracted over $600m (Eu541m) of orders, and bankers said the deal demonstrates the opportunities and favourable funding available in dollars – even in a rarer maturity – as the euro market remains subdued.

The new issue is the fourth benchmark US dollar German Pfandbrief this year, although the previous three all had a maturity of three years. LBBW launched the first, a $650m issue, in May, before MünchenerHyp sold a $600m deal on 12 July and BayernLB a $300m issue last Tuesday (2 August).

Landesbank Hessen-Thüringen (Helaba) leads Barclays, Credit Suisse, Goldman Sachs and Helaba launched the four year Reg S mortgage Pfandbrief with initial price thoughts of the low to mid-50s over mid-swaps this morning. The spread was then fixed at 50bp, with books in excess of $600m. The size of the deal was not fixed and the book was still open at the time The CBR went to press.

“It looks like a good deal all round,” said a syndicate official away from the leads.

It offered a new issue premium of around 5bp, according to syndicate officials away from the leads, who saw the LBBW May 2019s at 35bp, mid, and the MünchenerHyp July 2019s at 43bp, and estimated that the curve extension was worth 7bp-8bp.

Bankers said the spread of 50bp was equivalent to a level of around minus 15bp in euros.

“I doubt it would be possible to print a new euro benchmark at that level, even without the holidays,” said one. “This deal shows the advantages of the dollar market over euros right now – it’s still open for business, and pricing is very favourable.”

Bankers away from the deal said the choice of a four year maturity was interesting, noting that all other US dollar benchmark covered bonds this year have been either three or five year deals. The last four year benchmark was a $500m issue for Aareal in March 2015.

“The tenor is not something you see so often in this market, but you can see why it is appealing for issuers, as the saving they can achieve versus senior by using up their collateral is greater the further out you go along the curve,” said a syndicate official.

“Four years do tend to be challenging, as you can get caught betwixt and between – not being able to access the usual demand for three year paper nor offer that extra bit of yield you can with a five year. But given the lack of financials supply at the moment, this was a good time to do a deal like this.”

Bankers had suggested that many issuers would focus on the dollar markets, with activity in euro markets muted during the holidays. Although supply has been expected to be weighted towards the senior unsecured market, bankers said some issuers may also look to the covered bond market after recent deals were priced at levels equivalent to or tighter than would have been possible in euros.