Deutsche Apotheker- und Ärztebank (Dapo, or apoBank) is set to launch at EUR500m seven year Pfandbrief tomorrow (Tuesday), and is expected to offer an attractive pick-up versus recent intermediate issuance from its more established compatriots.

The German cooperative bank announced this morning that it has mandated Commerzbank, DZ Bank, LBBW and UniCredit as lead managers for the EUR500m no-grow deal, which is expected to be launched tomorrow, subject to market conditions.

The deal will be the fifth new benchmark Pfandbrief from Germany in 2018, and the ninth German deal including taps, but only the second in the seven year part of the curve, following a EUR1bn seven year for LBBW on 2 January. LBBW’s deal, the tightest ever euro benchmark covered bond, was priced at minus 20bp and seen today at around minus 22bp, mid. On Thursday, Helaba priced a EUR750m six year issue at 20bp.

Bankers at and away from the leads said apoBank’s deal is likely to offer a pick-up of around 3bp versus the recent trades, with LBBW and Helaba among the tightest names in the Pfandbrief market.

“I would assume apoBank will come wider than LBBW and Helaba, which are some of the top names from Germany,” said a syndicate banker at one of the leads. “ApoBank is a relatively small issuer and not every investor will have a line for this type of name, even if they have started to build their curve.

“But they are still an extremely well rated and of course they belong to the German cooperative sector – an extremely strong sector. Therefore they are, in my view, attractive, because they offer some small pick-up compared to their peers in the cooperative sector.”

ApoBank has three benchmark Pfandbriefe outstanding, having issued one per year since it in 2015 returned to the covered bond market after a seven year absence. All three – a February 2021 issue, a March 2023 issue and an October 2027 issue – were seen trading at around minus 17bp, bid.

Other issuers are also monitoring the euro covered bond market and could announce deals in the coming days, according to syndicate bankers. However, they noted that some German regions will begin celebrating the traditional Carnival holiday period on Thursday, and said the window for euro issuance this week could therefore close on Wednesday.