Deutsche Hypo issued its first green Pfandbrief today (Thursday), a “healthy” Eu500m six year issue that was swiftly executed on the back of over Eu850m of orders, showing enthusiasm for the green product, with some apparent price sensitivity attributed to a slowing market and NordLB-related headlines.

With the new issue, Deutsche Hypo becomes only the second issuer of a benchmark green covered bond, following Berlin Hyp, which has issued two such benchmarks to date – the last a Eu500m long six year in June.

After completing a European roadshow on Monday, Deutsche Hypothekenbank yesterday (Wednesday) afternoon announced a mandate for a Eu500m no-grow green Pfandbrief with a six year maturity.

Leads ABN Amro, Crédit Agricole, DZ, NordLB and UniCredit launched the deal at around 8:50 CET this morning with guidance of the mid-swaps minus 12bp area. After one hour, the leads revised guidance to the minus 14bp area, plus or minus 1bp will price within range, on the back of over Eu850m of orders, including Eu10m joint lead manager interest. Fifteen minutes later, the spread was set at minus 14bp. The book closed at 10:10, but the final size has not yet been disclosed.

“It was a very quick trade, being done in less than one and a half hours,” said a syndicate banker away from the leads. “It shows good enthusiasm for the green product.”

Some syndicate bankers suggested that the deal being priced in the middle of revised guidance reflected a slight change in sentiment in the market, suggesting that investors are becoming more selective as the year-end approaches.

“I think the fact that the book isn’t so big and that they priced at minus 14bp from the minus 14bp area, suggesting some price sensitivity, is less to do with the green story than the Pfandbrief story,” said a syndicate banker away from the leads. “These are tight levels in a market that is starting to look a bit tired, and after all this is Deutsche Hypo – they are in the NordLB group, which is still somewhat under pressure due to the shipping and capital stories.

“Nevertheless, it is a healthy trade.”

Bankers said the deal offered a new issue premium of around 3bp versus the issuer’s conventional Pfandbriefe, seeing Deutsche Hypo 2021-2024 paper, including a February 2023 issue and a May 2024 issue, all trading at minus 17bp, mid. The leads also cited as comparables the January 2021s, October 2024s and June 2025s of NordLB, which like Deutsche Hypo’s Pfandbriefe are rated Aa1, at minus 16bp, minus 13bp and minus 14bp, respectively.

Triple-A rated 2021-2014 paper from Berlin Hyp, MünchenerHyp and WL Bank was all seen trading between minus 19bp and minus 21bp, including Berlin Hyp’s two green Pfandbriefe.

The deal is backed by green commercial real estate loans with a second party opinion from oekom. Under Deutsche Hypo’s green bond framework, all funds raised through green bond issuance will be used exclusively to finance energy efficient real estate. Deutsche Hypo has itself been assigned a corporate sustainability rating of C+ by oekom.