Helaba is set to issue a euro benchmark six year covered bond tomorrow (Thursday), having announced a mandate today. Its compatriot, Sparkasse Pforzheim Calw, is also due, with a EUR250m five year Pfandbrief, its second sub-benchmark offering.

Landesbank Hessen-Thüringen (Helaba) announced a mandate this afternoon for the mortgage Pfandbrief, which will be launched tomorrow, subject to market conditions, according to a syndicate banker at one of leads ABN Amro, Erste Group, Helaba, Natixis and SG.

The deal will be Helaba’s first new benchmark covered bond since January 2017, when it issued a dual tranche Pfandbrief comprising a EUR1.25bn five year and EUR750m 10 year. It tapped the 10 year by EUR250m in October.

Syndicate bankers at the leads saw Helaba January 2022s at around minus 23bp, mid, November 2022s at around minus 22bp, and January 2027s at around minus 21.5bp.

Much of the German Pfandbrief supply brought to market in January has come in the form of new sub-benchmark issues or sub-benchmark-sized taps. The shortest-dated new German benchmark of the year so far is a EUR1bn January 2025 issue for LBBW priced on 2 January, which was seen at around minus 22bp, mid.

Helaba’s deal will be the shortest benchmark German Pfandbrief since November, when Berlin Hyp priced a negative yielding Eu500m four year. Bankers noted that a rise in yields throughout January had made short and intermediate-dated Pfandbriefe a more attractive option.

Sparkasse Pforzheim Calw announced this morning that it has mandated LBBW to lead manage a EUR250m no-grow five year mortgage Pfandbrief. The deal is expected to be launched tomorrow, subject to market conditions.

The German savings bank issued an inaugural syndicated sub-benchmark Pfandbrief in October 2015, a EUR250m five year issue, and has more frequently issued smaller deals.

A banker close to the deal said recent sub-benchmark German Pfandbrief trades are the most useful comparables for the awaited new issue, noting that the issuer’s previous EUR250m is relatively illiquid.

He identified an inaugural EUR250m five year Pfandbrief for DekaBank on Tuesday of last week (23 January) as being the best comparable, seeing the deal, which was priced at minus 16bp, trading this afternoon at around minus 20bp, mid.

“DekaBank is a bit of a different story as it has a broader business model here in the savings banks network,” he said, “but it serves as the best point to look at, if you adjust for a name like Sparkasse Pforzheim which is less well known, a rather infrequent issuer and has a smaller, more retail and regionally focussed business model.

“The target for this deal will most likely be bank treasuries and the savings banks network.”