LBBW is preparing to issue an inaugural benchmark sterling covered bond, having today (Thursday) announced a mandate for UK investor meetings ahead of a potential three year FRN aimed at financing the German bank’s sterling-denominated assets.

Landesbank Baden-Württemberg (LBBW) announced this morning that it has mandated Credit Suisse, LBBW, Lloyds and RBC to arrange fixed income investor meetings in the UK on Tuesday of next week, to discuss its Pfandbrief programme. The debut deal may follow, subject to market conditions.

A treasury official at LBBW told The CBR that it is entering the sterling market is to finance its sterling assets.

“We have business in the UK that creates a lot of sterling assets in the cover pool and this inaugural issue is our answer to those needs,” he said.

Syndicate bankers at the leads cited as comparables BayernLB February 2020s, at 16bp, bid, pre-announcement, and Deutsche Hypo March 2021s at 28bp. In euros, LBBW July 2021s trade in line with BayernLB November 2021s at minus 20bp, mid, (which the leads calculated as being equivalent to around three month Libor plus 4bp) while Deutsche Hypo November 2021s were seen at minus 15bp (seen equivalent to three month Libor plus 9bp).

The leads also cited 2020-2021 sterling outstandings from domestic issuers, seeing Lloyds January 2020s at 16bp, bid, and January 2021s at 20bp and Santander UK May 2020s at 17bp and April 2021s at 23bp.