Santander is set to issue an inaugural sub-benchmark Pfandbrief through its German subsidiary at the end of the month, following a roadshow next week, with strong follow-on demand expected after the bank recently issued a successful senior unsecured debut.

Santander Consumer Bank announced today (Tuesday) that it has mandated LBBW, Natixis, Santander and UniCredit to arrange the European roadshow ahead of a potential mortgage-backed sub-benchmark Pfandbrief with an expected maturity between seven and 10 years. The deal is expected to be rated AAA by Fitch.

The roadshow will start next Tuesday and end on Friday of next week (25 November). A syndicate banker at one of the leads said the deal could then emerge in the final week of November.

Santander Consumer Bank issued a Eu10m mortgage Pfandbrief, its first covered bond, on 27 July. As of the end of September, Santander Consumer Bank’s cover pool totalled just Eu33m.

While rating the deal AAA, Fitch said that in its cashflow analysis it models Santander Consumer Bank’s liability profile as incorporating “several upcoming euro-denominated issues” in the coming years, as communicated by the issuer.

“On the asset side we expect replenishment with newly originated loans with a profile similar to the current cover pool,” said the rating agency.

The bank issued an inaugural senior unsecured benchmark on 9 October, a Eu500m five year that was priced at 59bp over mid-swaps on the back of Eu2.5bn of orders and seen trading at 44bp, bid, today.

“They have done the hard work with the debut senior in terms of setting up lines, and we expect to find a good reception for this deal,” said a syndicate banker at one of the leads. “We expect some pent-up demand for this first secured trade from investors who weren’t able to participate in the senior, although there were plenty of investors that could.”

The Santander group in January 2011 acquired the German retail business of SEB AG. The bank received the necessary licences for Pfandbrief issuance from BaFin in September 2016.

Alongside its home market of Spain, the Santander group has issued in countries including Portugal via Santander Totta, the UK via the former Abbey National, and Chile via Banco Santander Chile. It is also setting up a mortgage bank in Poland through which it will issue covered bonds and has worked on an obligations foncières programme in France for export credit agency business.