Berlin Hyp is set to issue its second negative yielding benchmark covered bond tomorrow (Tuesday), having today announced a Eu500m four year Pfandbrief. Eika Boligkreditt is also expected in the market, with a Eu500m seven year, as the pipeline tops up.

Berlin Hyp announced a mandate for the Eu500m no-grow mortgage Pfandbrief this (Monday) afternoon. A syndicate banker at one of leads Barclays, Commerzbank, DZ, JP Morgan and LBBW said the deal will be launched tomorrow, subject to market conditions.

The deal will be only the second benchmark Pfandbrief with a maturity of four years or shorter this year, following a Eu500m three year issue for HSH Nordbank in July.

Such short-dated German supply has been rare in the CBPP3 era, as the Pfandbrief curve has often traded deeply in negative yield territory even up to medium maturities. Berlin Hyp sold the first negative yielding benchmark covered bond in March 2016, a Eu500m three year issue, and only one new euro benchmark covered bond has been priced with a negative yield since – a Eu1.25bn six year for Canadian Imperial Bank of Commerce (CIBC) in June 2016.

With the four year swap rate at 6bp today and 2021 paper from Berlin Hyp seen at around minus 21bp, mid, bankers at the leads said the new issue will be priced with a negative yield.

Berlin Hyp has issued two benchmark Pfandbriefe already this year, the last a Eu500m long six year green issue in June, which was seen today at around minus 19bp, mid.

Eika Boligkreditt announced this afternoon that it has mandated Crédit Agricole, Danske, Natixis, Nordea and UniCredit to lead manage the Eu500m no-grow seven year issue,

The deal will be Eika’s second euro benchmark covered bond of the year, following a Eu500m seven year in February. Syndicate bankers said the most appropriate comparable is one of the last euro benchmarks from Norway, a Eu500m seven year for SR-Boligkreditt, which was priced at mid-swaps flat on 26 September and seen trading at minus 8bp, mid, before news of Eika’s plans. On 10 November, DNB Boligkreditt priced a Eu1.5bn seven year at 9bp through mid-swaps. The deal was seen trading at re-offer.

With the pipeline topped up by today’s announcements, bankers expect another active week in the euro market, after last week saw seven issuers print a total of Eu4.25bn of benchmark supply.

“Once again, it looks like it could be an active week,” said a syndicate banker. “It would not be a surprise if this week’s volumes fall a bit short of last week’s, as that was a particularly high number for November, but the market looks good and there are more deals to be done.”

Wüstenrot Bausparkasse is also expected to issue an inaugural sub-benchmark Pfandbrief this week. The German building society completed a European roadshow last week, marketing a newly established Pfandbrief programme and a potential euro-denominated, mortgage-backed sub-benchmark debut.

A syndicate banker at one of leads Commerzbank, DZ Bank and LBBW said the deal will likely emerge later this week, after Berlin Hyp’s deal has been done.