A EUR750m six year Pfandbrief for Helaba today (Thursday) was deemed impressive in attracting EUR925m of orders at one of the tightest ever spreads in the euro covered bond market, after the issuer made its intentions clear with an unconventional execution strategy.

Helaba’s deal is one year shorter, but its spread matches that of the tightest ever euro benchmark in the covered bond market, a EUR1bn seven year for LBBW on 2 January.

Landesbank Hessen-Thüringen (Helaba) announced a mandate yesterday afternoon for the mortgage Pfandbrief, via leads ABN Amro, Erste Group, Helaba, Natixis and SG.

The deal was launched this morning with guidance of the mid-swaps minus 18bp area, plus or minus 2bp will price within range. The spread was then ultimately set at minus 20bp and the size at EUR750m with books over EUR925m.

“EUR750m at minus 20bp is quite an achievement,” said a syndicate banker away from the leads.

Syndicate bankers away from the deal noted it was unusual for a euro covered bond issuer to launch a deal with a fixed spread range.

“They made it clear what they wanted,” said one. “They opted for a tight approach, and in the end that helped them squeeze the spread to the tightest possible outcome.”

Some syndicate bankers at and away from the leads said the deal offered a new issue premium of around 2bp, seeing Helaba January 2022s at around minus 23bp, mid, November 2022s at around minus 22bp, and January 2027s at around minus 21.5bp. Other bankers away from the leads said, however, that the deal offered no new issue premium, citing Helaba June 2023s at minus 21bp, mid.

LBBW’s recent January 2025 issue, the shortest previous new benchmark Pfandbrief of the year, was seen at around minus 22bp, mid, pre-announcement.

Helaba’s deal is 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 more attractive to investors.

Syndicate bankers said other German banks could follow Helaba in coming to the market in the intermediate part of the curve, given the tight spreads available, but noted that many of the frequent Pfandbrief issuers have already come to the market this year, many issuing sub-benchmark taps.

The new issue is 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, which it tapped by EUR250m in October.

Sparkasse Pforzheim Calw announced yesterday morning that it has mandated LBBW to lead manage a EUR250m no-grow five year mortgage Pfandbrie and the deal was launched this morning with guidance of the mid-swaps minus 15bp area. After around one hour and 10 minutes the spread was set at minus 15bp, with books at EUR250m, including EUR25m joint lead manager interest. The book closed above EUR250m, excluding JLM interest.

The new issue is the second syndicated sub-benchmark Pfandbrief from the German savings bank, following an inaugural EUR250m five year issue in October 2015. The issuer has more frequently sold smaller trades.

Bankers said recent sub-benchmark German Pfandbrief trades are the most useful comparables for today’s deal, noting that the issuer’s previous EUR250m five year is relatively illiquid.

An inaugural EUR250m five year Pfandbrief for DekaBank priced at minus 16bp on Tuesday of last week (23 January) was highlighted as being the best comparable. The deal was seen trading at around minus 20bp, mid, pre-announcement, and bankers said the 5bp pick-up paid by Sparkasse Pforzheim Calw was appropriate given the issuers’ contrasting profiles and business models.