A EUR500m eight year Pfandbrief for Berlin Hyp attracted an expected level of demand today (Monday), but was priced in the middle of guidance as investors held firm and the issuer decided not to force a tighter deal. Sparebanken Vest is awaited tomorrow and possibly ANZ NZ later.

Berlin Hyp announced on Friday that it had mandated ABN Amro, Barclays, DZ, LBBW and UniCredit to lead manage the EUR500m no-grow mortgage-backed issue.

The deal was launched this morning with guidance of the mid-swaps minus 15bp area. The leads later announced that the books had exceeded EUR600m, including EUR55m joint lead manager interest. The spread was subsequently set at minus 15bp with books above EUR675m, including EUR55m JLM interest. The book closed at over EUR700m, including the EUR55m JLM interest.

“This deal went in line with our expectations in terms of the level of oversubscription,” said a syndicate banker at one of the leads. “These German Pfandbriefe are at very tight levels and you’re not going to get books that are two or three times covered, so we are pleased with the book.

“But having said that, we were hoping to squeeze the price by 1bp or 2bp, in line with some of the trades that have come before.”

The deal is the seventh euro benchmark Pfandbrief of the year, albeit the first with an eight year maturity. On 6 February, apoBank priced a EUR500m seven year Pfandbrief at minus 16bp, down from initial guidance of minus 15bp, and last Wednesday Deutsche Bank priced a EUR500m long seven year Pfandbrief at minus 12bp, down from guidance of minus 8bp – although bankers said the latter was “a different animal”, as Deutsche’s covered bonds trade notably wider than Berlin Hyp’s.

Some bankers suggested Berlin Hyp would have been able to price its deal tighter if it had not been for a period of volatility that hit the wider markets earlier this month and persisted through last week.

“Investors are still making up their minds which way the markets are going to go, so they are probably firmer in their limits than they would be otherwise,” said a syndicate banker away from the leads.

However, the lead syndicate banker said Berlin Hyp could have priced the deal tighter if it had chosen to.

“This is an issuer that has a reputation for being sensible in pricing and for being open with investors,” he said. “I think there was a slightly tighter deal on the table, but the issuer was very focussed on getting diversification of investors.”

Bankers said the deal offered a new issue premium of 2bp-3bp, with bankers citing Berlin Hyp February 2025s – its longest dated outstanding – at around minus 18bp, mid.

“That’s in line with what we’ve seen on some of the other recent deals that have been priced at the tighter end of the market,” said a syndicate banker away from the leads.

Bankers said that investors’ approach to Berlin Hyp’s deal is not a cause for concern for other prospective covered bond issuers this week.

“Generally, it feels like all transactions today didn’t exactly smash it out of the park,” said one. “I wouldn’t worry for the deals in the pipeline.”

Sparebanken Vest Boligkreditt announced today that it has mandated Deutsche, DZ, HSBC, ING and Swedbank to lead manage a euro benchmark covered bond issue, expected tomorrow.

The Norwegian issuer’s last euro benchmark was a EUR500m seven year last February.

ANZ New Zealand announced today that it will hold a roadshow, starting next Monday, ahead of a potential euro benchmark covered bond and/or senior unsecured issue. BNP Paribas and UBS have the mandate.

Should ANZ New Zealand opt for a covered bond, the deal will be the first benchmark covered bond from the country since October, when ASB Finance Limited sold a EUR500m seven year. It would be the New Zealand bank’s first euro benchmark covered bond since September 2016, when it sold a EUR1bn six year.

The issuer’s parent, ANZ, sold an inaugural EUR750m Sustainable Development Goals (SDG) senior bond on Wednesday.