Helaba achieved its size ambition with a EUR1bn seven year Pfandbrief today (Tuesday), paying a more generous premium than was offered by recent Pfandbriefe to be able to upsize from a EUR750m minimum target, albeit attracting a final book of just under EUR1.1bn.

Landesbank Hessen-Thüringen (Helaba) leads DZ, Helaba, NordLB, SG and UBS launched the seven year mortgage Pfandbrief with guidance of the mid-swaps minus 7bp area and an indicated minimum size of EUR750m.

Around one hour after launch, the leads announced that books were over EUR800m. The spread was later fixed at minus 9bp and the size at EUR1bn with books approaching EUR1.1bn.

Bankers noted that even though the book was only marginally oversubscribed, Helaba had been able to go beyond the indicated minimum size to print the EUR1bn trade that market participants would have expected the issuer to target, based on its past tendencies.

“It went well,” said a syndicate banker at one of the leads. “In the end they were able to scoop the EUR1bn size they were looking for.

“A not quite EUR1.1bn book for a EUR1bn trade shows it is, if not stretched, then clearly not aggressively over-bid either. But if the quality of the book allows for a EUR1bn trade, even a book of just EUR1.1bn or so can offer enough comfort for a good trade.”

A syndicate banker away from the leads agreed that the deal represented a decent result, in spite of the slim oversubscription.

“They paid up to get the size they wanted, but in this very tight market segment that is the way to ensure you get over EUR1bn demand,” he added.

The deal was deemed to have paid a new issue premium of around 5bp, with syndicate bankers citing Helaba February 2024s and January 2027s at around 14bp, mid, today.

Syndicate bankers noted that the premium was more generous than those offered by most recent Pfandbriefe, and said this clearly reflected Helaba’s intention to print a larger size. The deal is the first EUR1bn-sized German Pfandbrief since June.

“The initial premium of 7bp is quite a lot for a German issuer, and people may deem the 5bp left on the table to be good value compared to the very rich German trades that came before,” said the lead syndicate banker.