Deutsche Pfandbriefbank (pbb) issued a EUR750m five year Pfandbrief today (Thursday) that is understood to be its joint-largest, the deal standing out thanks to its maturity, being the first benchmark five year Pfandbrief of 2018, and its pick-up over other German names.

The new issue is understood to be pbb’s joint-largest covered bond, matching the size of a EUR750m seven year in January 2016. All its other benchmark Pfandbriefe have been EUR500m-sized.

“We were able to deliver EUR750m in size, which was at the upper end of the issuer’s expectations, and were still able to move pricing by 2bp,” said a syndicate banker at one of the leads. “We’ve seen other covered bonds, and Pfandbriefe in particular, that could barely move, so that in combination with us getting the deal done in a narrow window pre-ECB means this was certainly a good outcome.”

The benchmark mortgage Pfandbrief was launched this morning with guidance of the mid-swaps minus 11bp area. The leads announced after around one hour that books were above EUR500m, excluding joint lead manager interest.

Guidance was subsequently revised to the mid-swaps minus 12bp area, plus or minus 1bp will price within range, and the size set at EUR750m on the back of EUR840m of orders, including EUR85m joint lead manager interest. The spread was later fixed at minus 13bp with books above EUR950m, including the EUR85m JLM interest.

Crédit Agricole, Danske, Helaba, LBBW and UniCredit were leads.

Bankers noted that since market conditions softened in the first week of January, all four of the benchmark Pfandbriefe brought to market before pbb’s trade were EUR500m deals.

“Quite a few recent trades have played it safe and gone with a EUR500m size set from the start, so it is good to see pbb get to EUR750m,” said a syndicate banker away from the leads. “When they announced the EUR750m size with the book barely above that, excluding JLM orders it looked as though they may be squeezing it, but with the orders that came in it seems quite comfortable in the end.”

Syndicate bankers at and away from the leads said the deal paid a new issue premium of around 3bp, seeing Deutsche Pfandbriefbank January 2022s at minus 18bp, mid, March 2022s and September 2022s at minus 17bp, and January 2023s at minus 16bp.

Deutsche Pfandbriefbank’s last euro benchmark covered bond was a EUR500m five year issue in September, which it tapped by EUR250m on 25 January at a spread of minus 18bp. The deal was seen at minus 17bp, mid, today.

“One thing that was definitely attractive for investors is that pbb still offers a slight pick-up of around 3bp-4bp versus other German issuers that are pure retail-focussed or from the Landesbank side,” said the lead syndicate banker.

Syndicate bankers at the leads also cited as comparables recent, longer-dated Pfandbriefe issued in February and March, seeing Helaba February 2024s at minus 21bp, apoBank February 2025s at minus 17bp, Commerzbank March 2025s at minus 16bp and Berlin Hyp February 2026s at minus 15bp.

Syndicate bankers said demand was supported by the deal’s five year maturity, with the five year bucket having been relatively undersupplied this year.

The deal is the shortest benchmark Pfandbrief of the year so far, although some German issuers, pbb included, printed four year taps in January. Prior to today’s deal, German issuers had sold eight euro benchmark Pfandbriefe in 2018, all with maturities of seven to 10 years.

However, a lead syndicate banker said there was some additional price sensitivity due to the deal being at the shorter end, with some investors pushing back or staying away because of the tighter spread on offer.

“This price sensitivity has been particularly pronounced from some bank treasuries and official institutions at these tight valuations,” he said.