Wüstenrot Bausparkasse became the first German building society to sell a new Pfandbrief issue today (Wednesday), and hit the top end of its size and pricing parameters after attracting some Eu550m of demand to size an eight year sub-benchmark at Eu300m.

The issuer this year took over the Pfandbrief business of sister institution Wüstenrot Bank Pfandbriefbank and held a roadshow earlier this month.

A mandate for an eight year mortgage Pfandbrief sub-benchmark was announced yesterday afternoon and leads Commerzbank, DZ and LBBW went out with initial guidance of the mid-swaps minus 8bp area this morning for an “expected” size of Eu250m. With books above Eu450m, including Eu30m joint lead manager interest, guidance was then revised to the minus 9bp area, plus or minus 1bp will price within range.

The deal was ultimately priced at 10bp through-mid-swaps and sized at Eu300m on the back of a final book of more than Eu550m.

“We announced an ‘expected’ Eu250m size, but we knew there was room for manoeuvre upwards should the order book warrant it,” said a syndicate banker at one of the leads, “and that was the luxury position we found ourselves in. It was a very decent outcome for a sub-benchmark and the issuer and leads are very satisfied.”

He said the pricing was also a good result, being the same as levels Wüstenrot Bausparkasse has shown for private placements in the same, eight year maturity, while investors were aware that the issuer at the same time was not going squeeze the pricing on the sub-benchmark.

Demand was predominantly domestic, according to the syndicate banker, but he said the book included some “substantial” foreign orders.

“For a Hypothekenpfandbrief and a German building society concept that is still not so well known, they did well to achieve that,” he added, noting that the quality of orders was high and the diversity of accounts decent among the 33 investors participating.

Germany was allocated 81%, the Nordics 8%, the Benelux 7%, Switzerland 3%, and Austria 1%. Banks took 50%, central banks and agencies 26%, funds 15%, and insurance companies 9%.

The sub-benchmark was the only public covered bond in the euro market today and the syndicate banker said this helped Wüstenrot Bausparkasse’s deal, and that it had done well to avoid coming yesterday when two benchmarks were launched, notably a Eika Boligkreditt Eu500m seven year offering a higher spread.