Westfälische Landschaft Bodenkreditbank (WL Bank) priced the tightest benchmark covered bond since November today (Wednesday), its Eu500m seven year edging 2bp inside a larger, longer issue for LBBW on Monday and landing flat to fair value. Natixis Pfandbriefbank is lining up a Eu250m deal.

After announcing a mandate for a Eu500m no-grow seven year mortgage Pfandbrief yesterday (Tuesday) afternoon, WL Bank leads Barclays, DekaBank, Deutsche Bank, DZ Bank and UniCredit opened books for the deal this morning with guidance of the mid-swaps minus 10bp area.

Guidance was revised to the minus 13bp area plus or minus 1bp, will price within range, on the back of books above Eu1bn, including Eu60m of joint lead manager interest, before the spread was fixed at minus 14bp.

The spread is the tightest on a benchmark covered bond since November, when ING-DiBa sold a Eu500m 10 year issue at minus 15bp. LBBW on Monday priced its Eu1bn eight year mortgage Pfandbrief at 12bp through mid-swaps, which, prior to WL Bank’s deal, held the record for 2017’s tightest benchmark.

“It’s a very tight spread, the likes of which we haven’t really seen this year,” said a banker away from the deal. “But judging by the demand, and the levels of LBBW’s new issue and WL Bank’s curve, it’s an appropriate price.”

Bankers estimated that the deal offered no new issue premium, seeing WL Bank 2023s, 2025s and 2026s all quoted at around minus 14bp, pre-announcement.

Natixis Pfandbriefbank yesterday announced a mandate for a Eu250m mortgage Pfandbrief with an expected intermediate maturity, via leads BayernLB, Natixis and NordLB. The deal is set to be launched after a series of investor meetings.

The deal will be the German issuer’s joint largest covered bond, following a Eu250m 10 year public debut in September. All its previous covered bond issuance has come in the form of smaller private placements.