MünchenerHyp elected to be midsummer’s first mover in the covered bond market to avoid potential September crowds, according to MünchenerHyp’s Claudia Bärdges-Koch, with its Eu750m long nine year Pfandbrief yesterday (Wednesday) exceeding expectations and attaining “dream” pricing.

The German bank’s deal was the first euro benchmark covered bond since 11 July and stirred a market that many had expected to remain closed until later this month.

Bärdges-Koch, deputy head of treasury at Münchener Hypothekenbank, told The Covered Bond Report that there were three reasons that MünchenerHyp decided to be the first mover.

“The first reason is that we were told that nothing was going on and that the market had so much liquidity, that sales people were more or less bored and would love to just do their work and participate in a new bond,” she said. “The next and most important reason is that everyone will be back in the market in September and we could avoid just being one in the crowd.

“With our issue, we had the full attention and interest of the market, rather than being one of five or so issues on a single day in September.”

Furthermore, MünchenerHyp has a Eu500m public sector Pfandbrief that will mature on 11 September. Bärdges-Koch noted that the new issue will settle 19 days earlier.

“As we chose a short first coupon for the new issue, it doesn’t even have a negative carry effect,” she added.

Many market participants have forecast that covered bond spreads will widen next month should the ECB, as is widely expected, announce a tapering of QE after a governing council meeting on 7 September, but Bärdges-Koch said this was not a factor in MünchenerHyp’s decision.

“We would have had to issue before the ECB anyway in order to replace the maturing benchmark,” she said. “That did not play a part.”

Leads BayernLB, DekaBank, DZ Bank and UniCredit launched the October 2026 mortgage-backed deal yesterday morning with guidance of the mid-swaps minus 10bp area. Guidance was later revised to the minus 12bp area plus or minus 1bp will price within range, on the back of books over Eu650m, including Eu40m joint lead manager interest.

The spread was then fixed at minus 13bp with books above Eu800m, including Eu90m JLM interest, before the size was fixed at Eu750m. The final book stood at over Eu1bn, with 64 accounts from 10 countries participating.

Banks were allocated 41.2% of the deal, central banks and SSAs 40.9%, and funds, asset managers and insurance companies 17.9%. Accounts in Germany took 85.1%, Asia and the Middle East 6.9%, Austria and Switzerland 3.3%, the Netherlands 2.6%, and other Europe 2.1%.

“To be honest, it went a lot better than expected,” said Bärdges-Koch. “The high granularity is very nice, and we were already beyond Eu600m orders after around 40 minutes – we just had to refresh the screen and every time there was a new order, so we really enjoyed it.

“The spread was also more or less our dream. We started with minus 10bp and expected to end up at minus 12bp. We are very happy to get both the volume and the price.”