MünchenerHyp is set to issue the first euro benchmark covered bond in over a month, having today (Tuesday) announced a long nine year that would reopen the market earlier than many expected. The deal is seen as an interesting test of demand, with the potential to inspire other issuers to follow.

The last euro benchmark covered bond came on 11 July, when HSH Nordbank sold a Eu500m three year covered bond. Supply has since dried up during the traditional summer slowdown.

Münchener Hypothekenbank announced this afternoon that it has mandated BayernLB, DekaBank, DZ Bank and UniCredit to lead manage the October 2026 benchmark mortgage Pfandbrief.

“I am frankly a bit puzzled by the timing of this, as I think most people did not expect the euro market to reopen as early as this week,” said a syndicate banker away from the leads. “It will be very interesting to see how it goes, as you would expect MünchenerHyp to target a Eu500m-Eu750m deal, and I am not sure how many buyers are out there right now.

“However, the ECB should support them in the primary market, and in terms of the quality of the name and recognition, this is probably one of the better covered bond issuers to do a deal right now – even if they are one of the tightest names out there.”

The syndicate banker saw MünchenerHyp April 2026s at around minus 15bp, bid, today, and MünchenerHyp May 2027s at around minus 14bp. The April 2026s were seen trading at a yield of around 0.55% and the May 2027s at around 0.70%.

Parts of Germany were closed today for regional public holidays, but will return tomorrow, although many market participants remain on holiday.

Prior to MünchenerHyp’s announcement, syndicate bankers had speculated that the euro market would remain closed until the last week of August or potentially even later.

“If this goes well, however, we might have other issuers asking, why wait?” said a syndicate banker.

A mid-summer German benchmark would not be unprecedented, with LBBW, for example, having previously tapped the market during its traditional summer interregnum.

MünchenerHyp’s last benchmark was its Eu500m May 2027 mortgage Pfandbrief, which was sold on 2 May at a re-offer of 12bp through mid-swaps. That was also the last 10 year German Pfandbrief benchmark.