Foreign and SRI investors contributed strongly to a €1.2bn book for a Berlin Hyp €500m no-grow eight year green Pfandbrief on Tuesday, which also included accounts who participated in a recent buy-back of short-dated bonds, according to Bodo Winkler, head of funding and IR at the German bank.

Berlin Hyp officially announced the new issue on Monday, after having flagged plans for a longer-dated Pfandbrief on 5 June when launching the tender for short-dated Pfandbriefe. That buy-back concluded two weeks ago, with some €303m of four issues repurchased, to be replaced with central bank funding.

“In the context of the last tranche of TLTRO III in June, the short end of the curve does not make any sense now,” Winkler told The CBR. “We took part in the TLTRO – including the latest tranche – and therefore if we are approaching the market, we need something that is longer than the average maturities of our new lending, which is around seven years.

“There was then the question of whether we should maybe even do 10 years. However, we opted for the eight year tenor.”

After the mandate announcement on Monday, leads ABN Amro, Commerzbank, Crédit Agricole, DZ and LBBW went out with guidance of the mid-swaps plus 8bp area. Orders exceeded €750m within an hour, and after around an hour and 45 minutes guidance was revised to 6bp+/-1bp. The deal was ultimately priced at 5bp, with the book peaking above €1.2bn and over €950m of demand good at re-offer.

Winkler hailed the “beautiful” deal and its “really high quality” order book.

“It built up very nicely right from the start, with one order coming in after another,” he said. “There were a lot of names in the book that have a clear SRI or green bond strategy in place, so the fact it was a green Pfandbrief really supported the deal.”

According to Berlin Hyp, SRI investors accounted for more than half of the final order book.

Over half (54%) of the issue was place outside Germany, with domestic buyers taking 46%, Scandinavia 25%, the UK 15%, and the Benelux 6%. Banks were allocated 45%, funds 29%, central banks and official institutions 25%, and savings banks and affiliated companies 9%.

Investors who participated in the buy-back could receive priority allocation codes for the planned longer-dated issue, and Winkler said they showed up for the new issue.

“It was of course nice to see that investors did not simply want to sell Berlin Hyp,” he added, “but wanted to stay in our name and so returned on the back of these priority order codes.”

Berlin Hyp’s latest green Pfandbrief is its fifth and its ninth benchmark green bond, including other formats, meaning it remains the European bank to have issued the most green bonds. In April the bank began issuing green bonds as private placements – initially in senior preferred format – and also published its annual green bond report.

The bank flagged that it had hit, a year early, a target of having green lending constitute at least 20% of its loan portfolio by the end of 2020, and Winkler said the bank could announce a new target in this respect soon.