DG Hyp is set to issue a Eu500m long nine year Pfandbrief tomorrow (Wednesday) after Germany’s Carnival period comes to a close. Deutsche Hypo today announced it will next week meet sterling investors, raising the prospect of a subsequent debut covered bond for it in the UK currency.

The German issuers’ announcements came as the covered bond market remained otherwise quiet today, with no benchmark supply emerging for the fourth consecutive weekday as parts of Germany remained on holiday and with market participants awaiting the new month tomorrow.

DG Hypothekenbank announced a mandate today for a Eu500m no-grow long nine year mortgage Pfandbrief, via leads BayernLB, Commerzbank, Crédit Agricole, DZ Bank and UBS. A syndicate banker at one of the leads said the deal will probably be launched tomorrow, when key German accounts have returned to the office.

Bankers saw DG Hyp’s March 2026s quoted at minus 13bp, mid, pre-announcement, and also cited as comparables WL Bank’s February and August 2026s and MünchenerHyp’s April 2026s, all quoted at minus 14bp.

DG Hyp’s issued three benchmark Pfandbriefe last year, the last a Eu500m long eight year in October.

Deutsche Hypothekenbank this morning announced a UK roadshow “to introduce the Deutsche Hypo name to sterling investors and give a credit update”. Credit Suisse, Deutsche, HSBC, NordLB are arranging the roadshow, which will commence on Monday.

An official at the issuer declined to comment on whether it intends to launch a sterling-denominated covered bond in the future, but noted that it does have sterling-denominated assets.

Deutsche Hypo describes the UK as being one of its strategic core markets. As of the end of June 2016, Eu925m (11.8%) of Deutsche Hypo’s mortgage collateral pool consisted of loans originated in the UK, and Eu999m (8.6%) of its commercial real estate portfolio.

Bankers away from the leads said it would make sense for Deutsche Hypo to issue sterling-denominated covered bonds.

“They are quite prudently keeping their options open,” said one, “but it does sound like there is potentially a sterling covered bond to follow.”

Deutsche Hypo has previously only issued benchmark Pfandbriefe denominated in euros. Its last benchmark Pfandbrief was a Eu750m eight year issue in May.

Fellow German issuers Deutsche Pfandbriefbank and BayernLB have tapped the sterling market this year, the former selling a £250m three year floating rate note on 5 January and the latter a £250m short five year fixed rate issue on 12 January.