Aareal returned to the covered bond market with its first euro benchmark in over two years today (Wednesday), attracting over Eu1.3bn of orders to a Eu500m long five year Pfandbrief that impressed bankers with its spread, having been priced only 1bp wider than a slightly shortly Helaba deal.

The new issue is Aareal’s first euro benchmark Pfandbrief since September 2014 and its first benchmark covered bond in any currency since March 2015 – when it sold a $500m April 2019 issue – with the German lender having been relatively quiet in the interim as a result of being engaged in the integration of acquisitions Corealcredit and WestImmo.

After announcing a mandate for a Eu500m no-grow long five year mortgage Pfandbrief yesterday (Tuesday) afternoon, Aareal leads Commerzbank, DekaBank, DZ Bank, LBBW and UniCredit launched the July 2022 deal this morning with guidance of the mid-swaps minus 5bp area. The spread was later fixed at minus 8bp, on the back of books over Eu1.3bn.

“It’s a good result,” said a syndicate banker away from the leads. “Some of the recent German issues have found more limited demand than deals from less expensive jurisdictions, and so to take Eu1.3bn of orders after being out of the market for quite some time is a good outcome.”

The long five year deal is the sixth euro benchmark German Pfandbrief of the year and the second in the five year part of the curve, following a Eu1.25bn straight five year issue for Helaba on 5 January. Helaba’s deal was priced at 9bp through mid-swaps and seen trading at around minus 10bp, bid. Bankers noted that Aareal’s covered bonds have tended to trade further back of Helaba’s across the curve.

Citing the spread of the recent Pfandbrief supply, bankers away from the leads said Aareal’s new issue offered little to no new issue premium.

“It’s a good spread for Aareal on their comeback, and sets them up well for further issuance,” said another banker away from the leads. “It puts them back right in there amongst the tighter trading German issuers.”

On Thursday, Moody’s assigned a new Aaa rating to the mortgage covered bonds of Aareal, which are also rated AAA by Fitch.

Deutsche Pfandbriefbank tapped a $500m August 2019 public sector Pfandbrief by $100m via leads BayernLB, Credit Suisse, Goldman Sachs, JP Morgan and Nomura yesterday, at a spread of 55bp over mid-swaps. The original issue – pbb’s first benchmark covered bond in the currency – was priced at 60bp over mid-swaps in August.