BayernLB printed a EUR500m seven year Pfandbrief today (Monday) on the back of some EUR700m of orders, pricing 1bp tighter than it priced a 10 year in January, reflecting the market’s easing. Heleba is expected to issue a dual-tranche, five and 10 year deal tomorrow.

Bayerische Landesbank announced the mandate on Friday morning for the EUR500m no-grow public sector Pfandbrief.

Leads ABN Amro, BayernLB, Commerzbank, DZ Bank and Natixis launched the deal with guidance of the mid-swaps minus 15bp area this morning. After around one hour and 50 minutes, the leads revised guidance to the minus 16bp area, plus or minus 1bp will price within range, with books over EUR500m, including EUR50m joint lead manager interest.

The leads announced around 45 minutes later that books were around EUR700m, including EUR75m JLM interest, with guidance unchanged. The spread was subsequently fixed at minus 16bp.

“It looks like there was some investor sensitivity pushing back against a minus 17bp spread, but in the end it is a perfectly OK trade,” said a syndicate banker away from the leads.

Syndicate bankers said the deal offered a premium of around 5bp versus the issuer’s curve. BayernLB April 2024s and September 2025s were seen today trading pre-announcement at minus 21bp, mid, and BayernLB January 2026s at minus 22bp.

Syndicate bankers at the leads also cited as comparables 2024-2025 outstandings of LBBW, Berlin Hyp, DG Hyp, MünchenerHyp and WL Bank – all trading between minus 24bp and minus 19bp.

They noted that the price was more in line with the spreads achieved by recent Pfandbriefe on the primary market. Since wider market conditions softened after the start of February, all euro benchmark covered bonds from Germany have been priced in the range of minus 16bp to minus 12bp.

The new issue is BayernLB’s second benchmark Pfandbrief of the year, following a EUR500m 10 year public sector issue on 15 January, which it tapped by EUR150m on 23 January. The deal was priced at minus 15bp, and tapped at minus 16bp.

“That they’re now pricing a seven year at the same spread they tapped a 10 year not even two months ago shows how the market has changed in that time,” said a syndicate banker. “Investors are a lot more selective than they were at the start of the year.”

Landesbank Hessen-Thüringen (Helaba) announced a mandate this afternoon for a dual-tranche deal comprising a five year mortgage Pfandbrief with minimum size of EUR750m and a 10 year EUR500m no-grow public sector Pfandbrief.

Commerzbank, Credit Agricole, Deutsche Bank, DZ Bank, Helaba, NordLB and UniCredit have the mandate. The deal is expected to be launched tomorrow.