MünchenerHyp showed the midsummer market to be well and truly open to German issuers with a Eu750m long nine year Pfandbrief today (Wednesday) that attracted over Eu800m of mostly domestic orders. Commerzbank is set to follow with a 10 year, but other jurisdictions remain in holiday mode.

Münchener Hypothekenbank’s new issue is the first euro benchmark covered bond since 11 July, after which the traditional summer lull kicked in. The German bank announced a mandate for the October 2026 mortgage-backed issue yesterday (Tuesday) afternoon, signalling a reopening of the market earlier than many had expected.

Leads BayernLB, DekaBank, DZ Bank and UniCredit launched the deal at 9:00 CET this morning with guidance of the mid-swaps minus 10bp area. After around 55 minutes, guidance was 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 fixed at minus 13bp around one-and-a-half hours after launch, with books above Eu800m, including Eu90m JLM interest. The size was later fixed at Eu750m.

The deal is expected to be priced with a coupon of 0.625% and a yield of around 0.65%.

“MünchenerHyp are a good first mover, as they have an extremely loyal investor base and are one of the richest credits around,” said a syndicate banker at one of the leads. “They are always a good indicator of how receptive the market is, so this a very encouraging result.”

Deal distribution statistics were not available when The CBR went to press, but the lead syndicate banker said domestic accounts took a significant share.

The deal was deemed to have offered a new issue premium of around 3bp, with bankers citing MünchenerHyp March 2025s at minus 17bp, mid, April 2026s at minus 16bp, and May 2027s at minus 15bp. They also saw Berlin Hyp February 2025s and DG Hyp September 2026s at minus 15bp, and LBBW September 2025s and BayernLB January 2026s at minus 18bp.

“It looks like they pushed the deal a bit in terms of size, but the NIP of around 3bp compensates for that,” said a syndicate banker away from the leads. “The starting point of minus 10bp looked cautious, given that they priced a straight 10 year at minus 12bp in May, but that makes sense given the time of year.”

MünchenerHyp’s last benchmark was its Eu500m May 2027 mortgage Pfandbrief, which was sold on 2 May. That was also the last 10 year German Pfandbrief benchmark.

Shortly after the spread of MünchenerHyp’s deal was fixed and while books were still open, compatriot Commerzbank announced a mandate for its 10 year euro benchmark mortgage Pfandbrief.

ABN Amro, BBVA, Commerzbank, NordLB and UniCredit have the mandate. A syndicate banker at one of the leads said the deal could be launched tomorrow, subject to market conditions.

Bankers said the newly opened midsummer window offers a tempting proposition for German issuers, with many market participants forecasting a rise in spreads and yields after 7 September, when the ECB is widely expected to announce a tapering of its QE purchases.

“With the discussions on ECB tapering and what impact that could have on spreads, MünchenerHyp could well be better off taking Eu750m at minus 13bp now – and paying a bit more premium to do so – rather than waiting to see what happens in September,” said a syndicate banker.

German agency FMS Wertmanagement was also in the market today, with a Eu1bn short three year senior unsecured bond, attracting over Eu1.4bn of orders.

Bankers said issuers in other countries are likely to wait to re-enter the market.

“There is a reason why the Germans are out of the blocks first, as the rest of Europe is still very much on holiday mode, with many investors away,” said one. “I don’t think MüHyp will trigger an avalanche of supply from other jurisdictions – that may have to wait until next week or even later.”