MünchenerHyp became the first issuer to have sold both social and green covered bonds today (Tuesday), launching a EUR500m long five year Ecological ESG Pfandbrief that attracted more than EUR900m of demand from 80 investors in 14 countries, with 40% going distribution to green accounts.

After a roadshow finishing on Thursday, the German bank yesterday (Monday) announced that it would launch its EUR500m no-grow December 2023 benchmark in the near future. A lead syndicate banker said that announcing the deal the day beforehand typically helps interest in green bonds be lined up, with the low risk nature of the trade meanwhile minimising any overnight execution risk.

Leads ABN Amro, DZ and HSBC opened books with guidance of the mid-swaps minus 6bp area this morning. Fair value was put at minus 14bp-13bp, based on MünchenerHyp June 2023s trading at minus 15bp and June 2024s at minus 13bp.

After an hour and a half pricing for the EUR500m deal was set at minus 8bp on the back of books above EUR850m, excluding joint lead manager interest. The final order book reached more than EUR900m, including 80 investors in 14 countries, with 40% of investors classified as green accounts.

A syndicate banker at one of the leads said that the green element had helped give the deal momentum and attract accounts who might not otherwise have been interested in the Pfandbrief, even if demand did not come in as fast as for some other green bonds given the tight levels at which the asset class trades. He noted that once it was clear the deal was covered, some big Scandinavian orders came in, helping the book towards its final size.

“They can be happy with what they have achieved,” he added.

MünchenerHyp launched the first ever green or social covered bond, a EUR300m deal in September 2014 backed by cooperative housing loans, which is considered a social bond.