MünchenerHyp is set to launch its first US dollar benchmark in three years tomorrow (Tuesday), a $600m long three year Reg S mortgage Pfandbrief that follows a series of German dollar issues in the three year part of the curve. In euros, Banco Desio is due with only its second benchmark OBG.

The Bavarian lender has mandated Credit Suisse, DZ, HSBC, NatWest and RBC for the $600m (EUR532m) December 2022 trade, which is expected to be launched tomorrow, subject to market conditions, after its announcement this morning.

The new issue will be Münchener Hypothekenbank’s first dollar benchmark since July 2016, when it sold a $600m three year issue that matures this Friday (19 July).

Since Aareal reopened the Reg S market for German issuers with a $600m long two year in April, LBBW, Deutsche Pfandbriefbank (pbb) and UniCredit HVB have issued three year dollar deals in May and June. However, their outcomes have varied widely – LBBW attracted record demand to a $750m issue that was the first green covered bond in dollars and achieved tight pricing, while UniCredit was only just subscribed on a $500m dollar debut.

A banker involved in the UniCredit trade on 25 June said a key factor in its execution was the $500m (EUR444m) size, which meant it fell short of the EUR500m threshold necessary for LCR Level 1B eligibility, instead falling into 2A, thereby requiring a pick-up from some accounts, with some others declining to participate. He said that his “gut feeling” told him that the deal would have been subscribed earlier had it been $600m, rather than only being subscribed after pricing was set in the middle of guidance, at 32bp over mid-swaps, but noted that UniCredit was limited in the size it could do.

According to pre-announcement comparables circulated by MünchenerHyp’s leads, LBBW’s May 2022 green Pfandbrief was this morning quoted at 23.5bp over, pbb’s May 2022s were at 30bp, and UniCredit’s July 2022s at 28bp.

In euros, MünchenerHyp June 2023s were quoted at mid-swaps minus 7.5bp. A syndicate banker at one of its leads remarked that, with the euro swap rate at around minus 0.33% at around three and a half years, “I have no clue who would buy it” were the issuer to opt instead for euros.

Banco di Desio e della Brianza is expected to launch a EUR500m no-grow seven year OBG tomorrow, subject to market conditions, following an announcement today. Banca IMI, BNP Paribas, Crédit Agricole, Mediobanca, SG and UniCredit are joint leads.

The benchmark will be only Banco Desio’s second benchmark covered bond, following a EUR500m seven year debut in September 2017. The last OBG benchmark was a EUR750m long seven year from Mediobanca on 24 June, which attracted some EUR1.7bn of demand and was priced at 53bp over.

A banker suggested Banco Desio would find good demand amid the search for yield, but said it would be interesting to see how MünchenerHyp fares going “head to head” with concurrent German SSA supply in dollars, from L-Bank and Land Nordrhein-Westfalen.