Berlin Hyp has mandated a EUR500m no-grow 10 year mortgage Pfandbrief that is expected to be launched tomorrow (Wednesday), after BPCE and Swedbank Hypotek yesterday showed the euro market to be running smoothly with EUR1bn 12 and EUR1.25bn six year transactions, respectively.

Berlin Hyp’s mandate was announced today (Tuesday), with BayernLB, Commerzbank, DekaBank, DZ and UniCredit named as leads for a trade to be launched “in the near future”.

The German lender’s benchmark will be its first of the year, its last having been a EUR500m no-grow seven year in October that was priced at 6bp through mid-swaps.

Comparables circulated by the leads included Berlin Hyp February 2026s at minus 6bp, mid, BayernLB February 2029s at minus 3bp, and DZ Hyp January 2029s at minus 2bp. ING-DiBa last Thursday became the first issuer of the year to price a euro benchmark covered bond through mid-swaps, selling a EUR750m eight year Pfandbrief at minus 2bp.

The new issue will represent a resumption of euro supply following EUR2.25bn of issuance yesterday (Monday).

BPCE continued the recent long-dated trend with a EUR1bn 12 year priced at 12bp over mid-swaps via DekaBank, DZ, Natixis, NatWest, Nordea and NordLB.

Although the deal was comfortably oversubscribed, the order book of EUR1.55bn good at re-offer and tightening of 3bp from initial guidance of the 15bp area was more modest than on trades a month ago, a lead banker noted, with BPCE also paying a new issue premium of around 2bp, its August 2029s trading at around 8.5bp mid.

“It is fair to say things developed a little less frantically but a bit more rationally,” he said. “And people should appreciate the return of a certain amount of soberness.”

Swedbank priced its EUR1.25bn six year deal on the back of some EUR1.8bn of orders and could tighten in from the 6bp area to 2bp.

A banker away from the leads said Swedbank came a basis point or two wide of its peers, but that although this could be interpreted as a new issue premium, it could be viewed as an appropriate premium given that Swedbank has gotten wrapped up in the money-laundering scandal that previously hit Danske.

“It got plenty of traction,” he added, “and showed investors are very comfortable buying a covered bond from Swedbank.”

The 2bp over mid-swaps pricing of the six year deal meant it yielded 0.08%, allowing for a positive return, whereas a five year would have risked being priced at a negative yield, noted another banker.

BNP Paribas, Deutsche, NatWest, Swedbank and UBS were leads.