Berlin Hyp tapped by EUR250m a negative yielding EUR500m 2021 Pfandbrief today (Monday), building a EUR480m book even while pricing inside the outstanding bond. Following a rare EUR250m two year deal, the German bank has now taken out EUR500m of short end funding at negative yields within a week.

Berlin Hyp’s original EUR500m November 2021 issue was priced on 21 November at 17bp through mid-swaps, with a 0% coupon, a re-offer price of 100.433% and a yield of minus 0.108%.

Leads Barclays, Commerzbank, DZ Bank, JP Morgan and LBBW reopened the November 2021 mortgage Pfandbrief this morning with guidance of the mid-swaps minus 18bp area. The spread was later set at minus 20bp, and the final book stood at EUR480m, including EUR125m JLM interest.

The deal was ultimately priced with a re-offer price of 100.031% and a yield of minus 0.008%.

Bankers at and away from the leads said the tap offered no premium, with the original issue seen trading at around minus 19.5bp, mid, this morning.

“It went very well, pricing where we thought it would – more or less mid-market,” said a syndicate banker at one of the leads. “It offers a lot more than you would get if you went to the ECB with your money, so we had no problem whatsoever in collecting the EUR480m of orders.”

Around 55% of the deal was allocated to foreign investors.

On Wednesday Berlin Hyp sold a EUR250m two year mortgage Pfandbrief via sole-lead DekaBank. The deal was priced at 24bp through mid-swaps and with a coupon of 0.01% to yield minus 0.37%.

A banker close to the deal said it was launched in response to reverse enquiry and was effectively a private placement, but was sold to more than one account.

Such short-dated covered bond supply has been rare in recent years in both benchmark and sub-benchmark formats, given that much of the short end of the covered bond market has been trading at negative yields.

“It is probably not a blueprint that many issuers will follow, but it is an interesting exercise nevertheless,” said a syndicate banker away from the deal.