MünchenerHyp issued its first euro benchmark in over a year today (Tuesday), a Eu500m 10 year Pfandbrief, and although demand of Eu650m was relatively modest, the book was buoyed by the German bank’s followers, enabling it to price at the tightest spread for a new 10 year this year.

Münchener Hypothekenbank leads Commerzbank, DZ Bank, Goldman Sachs and HSBC launched the 10 year mortgage Pfandbrief with guidance of the mid-swaps minus 10bp area this morning. Guidance was later revised to the minus 11bp area on the back of around Eu600m of orders, before the spread was set at minus 12bp and the size at Eu500m, with the book at around Eu650m, excluding joint lead manager interest.

“It’s a fairly modest result in terms of the demand, but it’s very traditional, very German, very MüHyp,” said a syndicate banker at one of the leads. “MüHyp tends to price rather tight, but they have a loyal group of followers who were present today.

“People who bought this bond won’t suffer a lot, let’s put it this way, and it is already re-offer bid with the brokers.”

The deal is the tightest new benchmark covered bond with a maturity of 10 years or longer since November, when fellow German ING-DiBa priced a Eu500m 10 year at minus 15bp.

“Given the tight absolute spread it’s not too surprising that the demand is short of what we’ve seen from other countries of late,” said a syndicate banker away from the deal. “A 10 year Pfandbrief at minus 12bp isn’t for everyone.”

“But MüHyp tends to print deals of only Eu500m-Eu750m, so given their probably lower size ambitions, books of around Eu600m are fine.”

Bankers said the deal offered a new issue premium of 3bp-4bp, seeing MünchenerHyp June 2022s and June 2023s at minus 18bp, mid, June 2024s and March 2025s at minus 17bp, and April 2026s at minus 16bp.

The new issue is MünchenerHyp’s first new euro benchmark covered bond in over a year, with its last a Eu500m 10 year Pfandbrief in April 2016, which it tapped by Eu250m in July.