Deutsche Pfandbriefbank (pbb) issued the shortest-dated euro benchmark Pfandbrief in 11 months today (Wednesday), benefitting from 2017’s higher yields to attract over Eu1.3bn of orders to the positive-yielding Eu500m 4.5 year, in a part of the curve still deemed out of reach to tighter trading issuers.

Pbb’s deal is the shortest-dated euro benchmark German Pfandbrief since a Eu500m three year issue for Berlin Hyp last March, which was the first euro benchmark covered bond to be issued with a negative yield.

With the short end trading in negative territory for much of last year, most issuers moved further out the curve, although some such as Canadian Imperial Bank of Commerce later priced longer dated benchmarks with negative yields as the market ground tighter.

Pbb leads Barclays, Commerzbank, DekaBank, LBBW and Nomura launched the Eu500m no-grow August 2021 mortgage Pfandbrief with guidance of the mid-swaps minus 3bp area at 9:00 CET this morning. At just after 10:30, the spread was set at minus 6bp on the back of books over Eu1.3bn, excluding joint lead manager interest.

The deal was later priced with a coupon of 0.05% to yield 0.072%.

“They are definitely profiting from the fact that rates have backed off a bit,” said a banker away from the leads. “The 4.5 year swap rate is at about 15bp this morning, which last year would have seemed unimaginably high.

“The short end is the name of the game, and with this the first four year and the first truly short euro benchmark out of Germany for some time, investors were obviously keen.”

Pbb’s deal is the shortest euro benchmark from any jurisdiction since April, when Leeds Building Society sold a Eu500m straight four year issue.

Only certain issuers would be able to replicate pbb’s strategy, bankers said, noting that pbb’s covered bonds – rated Aa1 by Moody’s – trade wider than those of higher rated German names.

“If you’re one of those triple-A German issuers whose Pfandbriefe are all trading at around less 15bp then there is not too much you can take from this exercise,” said one. “But for pbb, this maturity was spot on.”

Syndicate bankers said the deal offered a new issue premium of 2bp-3bp, seeing pbb’s July 2020s quoted at 10bp, mid, November 2020s at minus 9bp, and March 2022s and January 2023s at minus 8bp.

The deal is pbb’s second publicly issued covered bond of 2017, following a £250m three year floating rate note on 5 January. The German issuer also tapped a $500m August 2019 public sector Pfandbrief by $100m on 17 January.