Helaba sold a debut US dollar benchmark Pfandbrief yesterday (Tuesday), taking over $650m of orders for a $600m (Eu541m) four year issue that enabled the German bank to match dollar needs at “very attractive” funding costs, according to its head of funding.

With the inaugural fixed rate benchmark, Landesbank Hessen-Thüringen (Helaba) became the latest German bank to tap the US dollar market this summer, following peers MünchenerHyp and BayernLB.

“As a universal bank we have ongoing funding needs in US dollars and also provide for a cover pool in US dollars,” Martin Gipp, head of funding at Helaba, told The CBR. “Due to the recent spread tightening in US dollar Pfandbrief products, we saw now a good opportunity to match our four year funding needs with a corresponding mortgage-backed Pfandbrief issue at very attractive funding costs.”

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 yesterday. The spread was then fixed at 50bp, with books in excess of $600m. The size was later set at $600m, with the book closing at over $650m.

“The deal went extremely well,” said Gipp. “It was the first four year dollar Pfandbrief since early 2015, and we saw especially strong demand from international central banks and official institutions.”

Banks bought 37% of the deal, SSAs 32%, central banks 26%, insurance companies and pension funds 3%, and fund managers 2%. Accounts in Germany and Austria took 45%, the Middle East and Asia 26%, the Nordics 12%, central and eastern Europe 8%, Switzerland 4%, the Benelux 2%, southern Europe 2%, and others 1%.

“The pricing was at the tight end of our expectations and provided for some positive arbitrage even compared to a new benchmark issue in euros,” said Gipp.

Bankers away from the deal said the spread of 50bp was equivalent to a level of around minus 15bp in euros, which they said was tighter than the issuer would have been able to achieve in the currency.

“It looked a pretty punchy price, and to get that at a rather large size – which will be popular with investors – is a good result,” said a syndicate official. “You can see from the books that a good range of investors are now looking at this kind of paper.”

Bankers had noted that the four year maturity is unusual in the US dollar market, with most covered bonds in the currency having maturities of three or five years. Gipp said that due to the composition of Helaba’s dollar cover pool, the four year maturity was the best fit to the issuer’s maturity profile.

The new issue is Helaba’s third benchmark Pfandbrief of 2016, following a Eu1.25bn four year issue in February and a Eu1bn six year in March. Gipp said that following the new issue, Helaba has completed almost three-quarters of its funding plans for the year and is now ahead of schedule.

“Any further capital market activities will be looked at at a later stage,” he said.

Bankers noted that the US dollar market has remained open while the last euro covered bond issue came on 20 July, with supply having been limited to three new benchmarks and a string of German Pfandbrief taps since a post-Brexit vote reopening at the start of July.

Although most dollar supply had been weighted towards the senior unsecured and corporate markets, MünchenerHyp sold its $600m three year Pfandbrief on 12 July and BayernLB a $300m Pfandbrief on Tuesday of last week (2 August).