Landesbank Baden-Württemberg issued its first green Pfandbrief today (Monday), attracting more than EUR1.6bn of orders to a EUR500m five year issue and hence achieving a larger and more granular book than those typical of non-green benchmark Pfandbriefe, according to bankers.

The deal is LBBW’s second green bond, following a EUR750m four year senior unsecured issue in December. LBBW becomes the third green covered bond issuer from Germany, following Berlin Hyp and Deutsche Hypothekenbank.

Landesbank Baden-Württemberg (LBBW) announced on Friday morning that it had mandated ABN Amro, DZ Bank, LBBW, Swedbank and UBS to lead manage the inaugural EUR500m no-grow five year issue.

The deal was launched this morning with guidance of the mid-swaps minus 9bp area. After around one hour and 15 minutes, the leads announced that books had surpassed EUR1bn, including EUR80m joint lead manager interest.  The spread was subsequently set at minus 12bp, with books approaching EUR1.5bn, including EUR80m JLM interest. The final book stood at above EUR1.6bn, with over 75 accounts.

Bankers at the leads said the book was larger and more granular than those for recent non-green Pfandbriefe, with greater participation from non-German accounts, in particular from accounts in the Netherlands and the Nordics. A banker at one of the leads claimed that the bid-to-cover ratio is the second highest ever recorded in the German Pfandbrief market.

“There were at least 25% more lines than you’d get for a normal German Pfandbrief,” he said. “Like with the DNB trade last week, you can really see the green benefit.”

Last Tuesday, DNB Boligkreditt issued an inaugural EUR1.5bn seven year green covered bond, attracting over EUR2bn of demand, of which some EUR1.2bn was related to green accounts. The deal was priced at the same spread as a non-green, EUR1bn five year issue for compatriot SpareBank 1 Boligkreditt.

Syndicate bankers said LBBW’s deal offered a new issue premium of around 6bp versus the issuer’s curve, with LBBW’s February 2022s seen at 18.5bp, mid, August 2022s at minus 18bp, January 2024s at 20bp and January 2025s at minus 15bp. They also cited as comparables the green Pfandbriefe of Berlin Hyp and Deutsche Hypothekenbank, seeing Berlin Hyp May 2022s at minus 16.5bp and October 2023s at minus 15bp, and Deutsche Hyp November 2023s at minus 14bp.

“They could probably have gone tighter, but with this being an inaugural deal they did not want to leave a bad taste,” said a syndicate banker at one of the leads.