DekaBank and BayernLB sold sub-benchmark public sector Pfandbriefe today (Tuesday), the former attracting more than EUR700m of demand to a EUR250m five year issue, the latter tapping by EUR150m a EUR500m 10 year at a spread 1bp tighter than the original issue’s pricing last week.

Leads DekaBank, Deutsche Bank and DZ Bank launched DekaBank’s EUR250m no-grow public sector Pfandbrief at 9:00 CET this morning with guidance of the 13bp through mid-swaps area.

After around 35 minutes, guidance was revised to the minus 15bp area, plus or minus 1bp will price within range, on the back of more than EUR500m of orders, including EUR45m joint lead manager interest. The spread was fixed at minus 16bp and the book closed at more than EUR700m, including EUR45m JLM interest, just after 10:00.

Bankers away from the deal said that the book was substantially larger than what is typical for sub-benchmark supply, noting, for example, that the book for a EUR250m tap for Berlin Hyp yesterday (Monday) was last reported at over EUR480m.

“It is very impressive demand for this kind of deal,” said one. “That probably reflects the spread, which is a more than you’d expect to get for a five year benchmark.”

Bankers said the deal, rated Aaa by Moody’s, offered an attractive pick-up versus benchmark triple-A five year Pfandbriefe, which trade in the low 20s to high teens through mid-swaps.

Bayerische Landesbank’s EUR500m January 2028 public sector Pfandbrief was reopened for a EUR150m no-grow tap with the spread set at mid-swaps minus 16bp. The book closed just under an hour later, with over EUR200m of orders.

The original deal was priced at minus 15bp on Monday of last week (15 January), and seen trading at around minus 17bp, mid, pre-announcement.

A banker close to the deal said they had decided to reopen the 10 year in response to follow-on demand after the pricing of the initial issue, taking of advantage of the issuer’s relative rarity in the covered bond market – the new issue being its first euro benchmark since January 2016.

BayernLB was sole-lead.