Berlin Hyp launched a €500m green mortgage Pfandbrief today (Tuesday), while Sparebanken Vest Boligkreditt is set for a green debut tomorrow and Kookmin Bank is due to follow compatriot KHFC into the market with a benchmark that will be its first in euros and in sustainable format.

The spate of green, social and sustainable deals comes at the end of a relatively busy first half for ESG-related covered bonds. Maureen Schuller, head of financials research at ING, noted that the €5bn of supply is well ahead of €1.5bn issued in the first six months of 2019.

“The higher year-to-date supply in sustainable covered bonds contrasts sharply with the almost €30bn lower euro benchmark covered bond supply compared to last year’s first half issuance,” she added.

Berlin Hyp had on 5 June flagged plans to issue a longer-dated Pfandbrief when launching a tender for short-dated Pfandbriefe, and yesterday (Monday) announced the mandate for today’s new issue, its fifth green Pfandbrief.

This morning, leads ABN Amro, Crédit Agricole, Commerzbank, DZ and LBBW went out with guidance of the mid-swaps plus 8bp area for the €500m no-grow eight year green mortgage Pfandbrief. After around an hour, books were reported as being over €750m, excluding JLM interest, and after around an hour and 45 minutes, the guidance was revised to 6bp+/-1bp, WPIR, on the back of over €1.2bn orders, excluding JLM interest. It was ultimately priced at 5bp on the back of over €1.2bn of demand, excluding JLM interest, pre-reconciliation, and the final book was above €950m, excluding JLM interest, good at re-offer.

A syndicate banker away from the leads said the deal went much as expected, building upon the last eight year, issued by compatriot DZ Hyp, on 17 June, which had a size of €1bn and was also priced at 5bp after the book peaked above €1.5bn.

“It was a good trade,” he said, “but the market is a little bit softer since then.”

A lead banker saw DZ Hyp’s 2028s at 5.5bp and said this suggests the market has reached its limits in terms of spreads.

“We are hitting the ceiling,” he said.

Syndicate bankers at and away from the leads put fair value at 4bp based on Berlin Hyp’s curve, implying 1bp of new issue premium, and a lead banker said the green element definitely helped in achieving this.

Berlin Hyp did not try to squeeze the last basis point and land at 4bp, said the first lead banker, but opted to leave something on the table for investors.

“In particular given the strategic nature they attribute to all their green projects,” he said, “they felt that printing at plus 5bp would do more to enhance their own reputation as a responsible and down to earth issuer.”

Sparebanken Vest Boligkreditt today announced plans for an inaugural green euro benchmark and the seven year deal is expected to be launched as soon as tomorrow (Wednesday), subject to market conditions.

The Norwegian savings bank set up its green bond framework, which allows for senior and covered bond issuance, last summer. Its last euro benchmark was a €750m seven year transaction in February 2019.

According to pre-announcement comparables circulated by the leads, Sparebanken Vest €500m February 2025s and €750m February 2026s were both at 10bp, and SR-Boligkreddit green October 2026s and non-green June 2027s were at 9bp and 11bp, respectively.

A lead banker said the issuer will likely target a €500m size.

“This is what they generally do,” he said, “although it has kept some optionality open in announcing a benchmark.”

Credit Suisse, ING, LBBW, Natixis, SEB and Swedbank have the mandate.

Kookmin Bank today announced plans for a five year issue that will be its first in euros and first sustainability covered bond. The issuer will hold a series of fixed income investor calls from tomorrow.

BNP Paribas, Citi, Crédit Agricole, JP Morgan, HSBC and SG have the Kookmin mandate.

The announcement comes after South Korean compatriot KHFC yesterday (Monday) launched the first covered bond out of Asia since the onset of the coronavirus pandemic, a €500m five year social bond.

Kookmin has meanwhile become the first Korean issuer to sign up to the Covered Bond Label.

“It is our great pleasure to join the Covered Bond Label as the first participating bank in South Korea,” said Minhyuk Kang, general manager of Kookmin Bank. “Kookmin Bank has always been a pioneer in the market, issuing the first covered bonds in the domestic market since the Korean Covered Bond Act was enacted in April 2014.

“We sincerely hope to play an important role in the Asian covered bond market as a frequent covered bond issuer and we are very proud to be part of this initiative to increase the transparency of the covered bond market and boost the confidence of investors.”