ING-DiBa is set to launch its first benchmark Pfandbrief in four years tomorrow (Tuesday), having mandated for a Eu500m 10 year issue, and is expected to take advantage of a clear, pre-US election window, with bankers seeing the issuer’s strength and rarity value supporting a tight print.

The new issue will be the German ING subsidiary’s first benchmark Pfandbrief since March 2012, when it sold a Eu500m March 2019 issue, which is its only benchmark covered bond still outstanding. Its only other benchmark, a Eu500m debut sold in 2011, matured this June.

ING-DiBa announced the mandate this (Monday) morning for a Eu500m no-grow 10 year mortgage Pfandbrief, with leads Crédit Agricole, Commerzbank, Danske, ING and LBBW. A syndicate banker at one of the leads said the deal will be launched tomorrow, subject to market conditions.

“I think we surprised some market participants with this announcement,” he added. “The window should be pretty clear and there should be full attention on this deal.

“There’s definitely a window for high quality products and for a high quality name like this one I don’t foresee any hurdles tomorrow.”

Bankers agreed that conditions were supportive and said that wider market sentiment had improved this morning, on the back of an FBI announcement that it has found no evidence of criminality in a new batch of emails linked to Democrat presidential candidate Hillary Clinton’s unauthorised use of a private server when Secretary of State – a development that has been interpreted as boosting the her chances.

“The market is pretty stable and unexciting today,” said a banker, “so if conditions stay the same I expect a trade like ING DiBa’s could be done in a few hours, well before the election.”

Syndicate bankers at and away from ING DiBa’s leads noted that 10 year paper from other triple-A German issuers is mostly quoted at minus 17bp-16bp, mid. They said fair value for the new issue will also be at this level, noting that ING-DiBa’s Pfandbriefe are rated Aaa by Moody’s and citing the strength of the issuer and its cover pool.

“This is not just an advertisement, but in terms of their collateral, ING DiBa is one of if not the best name out of Germany,” said the lead syndicate banker. “This is 100% plain German residential mortgages, a lot of them in small sizes, and then you have the connection to the ING Group and the fact that the German entity itself is full of liquidity.

“It’s top of the top out of Germany.”

Bankers added that ING DiBa may have to offer some premium because it is such an infrequent issuer – noting that the Netherlands’ SNS Bank offered such a pick-up when it sold its first deal in four years last month – but said the rarity value of the name could also support a tighter spread.

“I’m not yet sure how that will fit and how this deal will pay up, so to speak,” said the lead syndicate banker.

ING Bank has also been absent for the market for some time, with its last benchmark having been a Eu1.25bn 10 year in May 2013.

ING DiBa’s deal is set to be the first euro benchmark covered bond of the month, with the last benchmark a Eu750m 10 year issue for Denmark’s BRFkredit on 27 October, and bankers suggested that several issuers are monitoring the market.

However, they said that other covered bond issuers are likely to wait at least until the result of the US election is known on Wednesday before advancing with any planned trades, and said that a win for Republican candidate Donald Trump could further disrupt activity given that markets expect a Clinton victory.

“There are a lot of issuers still sitting out there and looking at the market, some of which have perhaps been surprised by this new mandate,” said a syndicate banker. “I’m sure they will closely follow this trade tomorrow, and then depending on the result I would not be surprised to see more deals hitting the screens later this week.”