Commerzbank achieved a level flat to recent shorter German supply and a final book of EUR800m for a EUR500m seven year Pfandbrief today (Friday), even after some EUR150m of orders fell away as pricing was tightened from attractive initial guidance.

“It is a nice trade and a nice way to end the week,” said a syndicate banker at one of the bank’s leads. “That the final book was over EUR800m, after indications in the context of EUR900m-plus, indicates where spread sensitivities were, but with EUR800m you have an average allocation of 60%, which is still very doable and allows for differentiation between different types of investors, and you don’t have to be too harsh on anyone.”

Commerzbank announced yesterday (Thursday) afternoon that it had mandated ABN Amro, Commerzbank, DZ Bank, Santander and SG to lead manage its EUR500m no-grow mortgage Pfandbrief.

The deal was launched this morning with guidance of the mid-swaps minus 5bp area. After around one hour and 10 minutes, the leads announced that books were over EUR600m.

Guidance was later revised to the minus 8bp area, plus or minus 1bp will price within range, with books over EUR900m, excluding joint lead manager interest, before the spread was fixed at minus 9bp with books over EUR950m, excluding JLM interest. The final allocatable book was over EUR800m.

It is understood that the size of the bid from the Eurosystem was in line with those reported for CBPP3-eligible issues since mid-April, of around 30% of the expected issuance size.

Syndicate bankers at and away from the leads said the deal paid a new issue premium of around 3bp, seeing Commerzbank March 2025s – its most recent seven year issue, having been priced at minus 15bp in March – at minus 12bp. Syndicate bankers at the leads also cited LBBW July 2024s at minus 13bp, September 2025s at minus 13bp and June 2026s at minus 12bp.

The pricing of the new issue matches that of the other two benchmark German Pfandbriefe issued this month, although both were shorter dated. Deutsche Bank priced a EUR500m five year at minus 9bp on 8 May and Deutsche Pfandbriefbank priced a EUR500m six year at the same level on Tuesday. Both deals were seen trading at around minus 10bp, mid, this morning.

“They took a sensible approach to the pricing,” said a syndicate banker away from the leads. “The premium at the start was attractive and gave them momentum to tighten 4bp, and they didn’t try to go tighter than those recent, shorter dated deals.”

A syndicate banker at one of the leads said the minus 9bp level “was not a stretch”.

The deal is Commerzbank’s third euro benchmark covered bond of the year, following the EUR500m seven year issue in March and a EUR500m 10 year issue on 9 April.

Aktia Bank announced this morning that it expects to issue a EUR500m no-grow five year covered bond as soon as next Tuesday, after European public holidays on Monday. The Finnish bank completed a European roadshow marketing the deal yesterday.

The deal will be the Finnish issuer’s first euro benchmark covered bond since March 2015.

Syndicate bankers at leads BNP Paribas, LBBW, Natixis and Nordea saw Aktia April 2019s at minus 12bp, mid, and March 2022s at minus 10bp. They also cited as comparables OP February 2023s at minus 10bp and Nordea February 2023s at minus 7bp and November 2023s at minus 8bp.