Haspa paid a relatively slim NIP for a EUR500m five year Pfandbrief today (Tuesday), attracting over EUR700m of demand. Commerzbank and Stadtsparkasse München are set to follow in the belly of the curve tomorrow, and Cajamar will test sentiment towards Spain with a five year cédulas.

Hamburger Sparkasse (Haspa) announced yesterday (Monday) morning that it had mandated BayernLB, Commerzbank, DekaBank, Haspa and LBBW to lead manage its EUR500m no-grow mortgage Pfandbrief.

The deal was launched this morning with guidance of the mid-swaps minus 7bp area. Guidance was later revised to the minus 9bp area, plus or minus 1bp will price within range, with books over EUR600m. The spread was subsequently fixed at minus 9bp with books over EUR700m, excluding JLM interest.

A syndicate banker at one of the leads noted that the demand was slightly lower than for other recent Pfandbriefe from German mortgage banks, such as a Berlin Hyp five year, which attracted over EUR900m of orders. He noted that Pfandbrief issues from German savings banks like Haspa tend to be even more driven by domestic demand than their mortgage bank counterparts, and said in that context that the final book of over EUR700m was a good result for the issuer.

“All in all, it’s a good trade,” he said.

The deal was deemed to have paid a new issue premium of around 2bp, with syndicate bankers at and away from the leads citing Haspa March 2022s at around minus 12bp, mid, and May 2024s at around 10.5bp. The last five year benchmark from Germany, a EUR500m May 2023 issue for Berlin Hyp, was priced at minus 10bp on 23 May and seen trading at around minus 11bp, mid, today.

Syndicate bankers noted the new issue premium was substantially smaller than those paid for recent core, non-German supply, with deals from the Benelux yesterday having offered concessions of 5bp-6bp.

The deal is Haspa’s first benchmark Pfandbrief since May 2017, when it issued a EUR500m seven year.

Commerzbank this morning announced a mandate for a September 2023 euro benchmark mortgage Pfandbrief, via leads Crédit Agricole, Commerzbank, Danske Bank, DekaBank and HSBC. The deal is expected to be launched tomorrow.

Syndicate bankers away from the leads estimated that fair value for the new issue will be around minus 14bp, based on Commerzbank’s curve, seeing its November 2023s at around minus 14bp, mid, and its July 2024s at around minus 13bp.

The deal will be Commerzbank’s fourth euro benchmark Pfandbrief in only three months. Its last was a EUR500m seven year on 18 May.

Also this morning, Stadtsparkasse München announced it has mandated BayernLB to lead manage a EUR250m no-grow mortgage Pfandbriefe with a six year maturity.

The deal will be the German savings bank’s second sub-benchmark Pfandbrief, following a EUR250m 10 year debut in September. The Stadtsparkasse München September 2027s were seen at minus 6bp, mid, today.

Bankers said fair value for the deal will be around the minus 10bp area, based on the secondary levels of recent benchmark Pfandbriefe.

Aside from the pre-announced deals, syndicate bankers said another German issuer is monitoring the market ahead of a potential benchmark Pfandbriefe issue.

Cajamar Caja Rural announced a mandate today for a five year euro benchmark cédulas hipotecarias, via leads BBVA, Crédit Agricole, Raiffeisen Bank International, Santander and UBS.

The deal, expected tomorrow, will be the first Spanish covered bond to emerge since Spanish prime minister Mariano Rajoy was forced out of office by a no confidence vote on Friday, with new prime minister Pedro Sanchez to form a government in the coming days.

Although the broader market reaction to the political uncertainty in Spain has been much more modest than to recent developments in Italy, the spreads of Spanish covered bonds still widened substantially in May – by around 14bp on average, the largest move in any market segment outside Italy.

“It seems that the widening pressure on Spanish covereds has eased, but this will still be an interesting test of sentiment towards Spain,” said a syndicate banker away from the leads.

The new issue will be only the fourth benchmark covered bond from Spain this year, and the first since 25 April, when Caja Rural de Navarra issued a EUR500m seven year sustainable cédulas.