LBBW is expected to reopen the euro benchmark covered bond market tomorrow (Tuesday), with other issuers also potentially entering the market, although syndicate bankers suggested the market could take longer to get up to speed after the holidays. KHFC is planning its third euro social bond.

Landesbank Baden-Württemberg (LBBW) announced plans for a long seven year benchmark mortgage Pfandbrief this (Monday) morning, with ABN Amro, BNP Paribas, LBBW, Lloyds, Natixis and TD named as leads.

The mandate announcement – on a day when parts of Germany and Europe have been on holiday – is the first in euro benchmarks this year, with no new issues having been launched since a €500m long nine year for Commerzbank on 3 December.

A syndicate banker at one of the leads said such a trade is “almost a tradition” for the issuer, as this will be the fourth consecutive January in which it will have issued a seven year. In 2019 it sold the second euro benchmark of the year, a €750m seven year, which arguably performed better than the re-opener from Commerzbank.

“More often than not it’s a really good window,” said the syndicate banker. “They took a look at the market, spoke amongst themselves, and decided to do it again to open the market for others.”

The lead banker said that the issuer could take comfort from an upcoming redemption of a €750m print on 13 January, calling it a “nice coincidence”.

According to pre-announcement comparables circulated by the leads, LBBW’s outstanding January 2026s and September 2028s were trading at minus 2bp and minus 1bp, respectively. Helaba January 2027s and ING-DiBa May 2027s were seen at minus 3bp, while Commerzbank December 2026s and DZ Hyp January 2027s were at minus 2bp and minus 1.5bp, respectively.

The syndicate banker said there is a large pipeline filled by a number of large “usual suspects”, as well as medium-sized names from core jurisdictions.

“Tomorrow the primary market will spring back to life,” he said. “Some issuers might wait in the morning to see how LBBW goes before jumping in, but regardless, there will be lots of supply, I’m pretty sure of that.”

Another syndicate banker said other issuers are also planning to launch transactions tomorrow, subject to market conditions, but that the market would likely take a couple more days to be “fully up to speed”, with more activity expected on Wednesday and Thursday.

“There will be a few waiting at the sidelines and seeing how the first trades are faring and then drawing their conclusions,” he said. “But there are still 360 days left in the year, so I would not be too concerned if there were only a handful of trades this week.”

Korea Housing Financing Corporation (KHFC) announced a roadshow for a euro-denominated social covered bond, commencing next Monday (13 January). BNP Paribas, DBS, ING and Société Générale have the mandate.

The transaction is set to be the Korean’s third euro benchmark covered bond in social format, its last having been a €500m five year in June 2019.

Article amended on 7 January to remove an earlier reference to DZ potentially entering the market, which we now understand was incorrect.