Commerzbank issued a Eu750m 10 year mortgage Pfandbrief today (Thursday), its first new benchmark covered bond of the year, tightening the spread from a cautious starting point to price at minus 11bp, while still offering a slight pick-up to a shorter dated issue from MünchenerHyp yesterday.

Commerzbank announced a mandate for the 10 year issue yesterday (Wednesday) morning, shortly after its compatriot, Münchener Hypothekenbank, launched a Eu750m long nine year issue that was the first euro benchmark covered bond in over a month (see separate article).

Commerzbank leads ABN Amro, BBVA, Commerzbank, NordLB and UniCredit launched the deal at 9:00 CET this morning with guidance of the mid-swaps minus 8bp area. At just before 10:00, guidance was revised to the minus 10bp area, plus or minus 1bp will price within range, on the back of books above Eu700m, excluding joint lead manager interest.

The spread was fixed at minus 11bp at just before 11:00, with books above Eu800m, excluding JLM interest. The size was later fixed at Eu750m.

“Like MüHyp yesterday, the initial guidance looked somewhat cautious,” said a syndicate banker away from the leads. “But the final spread is a good result.”

The re-offer spread of 11bp is 2bp wider than that of MünchenerHyp’s shorter dated deal yesterday. Bankers said this was appropriate because Commerzbank’s Pfandbriefe tend to trade slightly wider than those of MünchenerHyp.

Bankers added that it is encouraging that Commerzbank and MünchenerHyp had found sufficient demand to print deals larger than the Eu500m size that has become the norm in the German Pfandbrief market.

The deal is Commerzbank’s first new benchmark Pfandbrief since November 2016, when it sold a Eu500m February 2023 issue, which it tapped by Eu500m in January.