Berlin Hyp reopened the post-summer euro benchmark covered bond market in style today (Tuesday), pricing a €500m no-grow 10 year green Pfandbrief with a new issue premium of just 1bp on the back of a €2.15bn-plus order book comprising well over 80 accounts.

Following a mandate announcement yesterday (Monday), leads Crédit Agricole, DZ, HSBC, JP Morgan and LBBW opened books this morning with guidance of the 9bp over mid-swaps area for the €500m no-grow 10 year mortgage Pfandbrief. Within an hour, the leads reported books above €1bn, including €165m joint lead manager interest, and after one-and-a-half hours the spread was fixed at 6bp over on the back of books above €1.3bn. The final book good at re-offer reached more than €2.15bn, including €145m joint lead manager interest.

The deal is the first euro benchmark since Kookmin Bank on 8 July sold a €500m five year, while Berlin Hyp itself sold the third-last pre-summer euro benchmark, a €500m eight year green Pfandbrief on 30 June.

Syndicate bankers at and away from the leads said the new issue did not merely reopen the covered bond market after the summer break, but did so very successfully.

“It was good to finally see some supply,” said one, “and the book of €2.1bn is quite something.”

With the new issue being Berlin Hyp’s 10th green bond, the issuer was particularly keen for it to be a success, according to a lead syndicate banker.

“This was delivered,” he said. “I’m sure they are proud of how it went, and they have every reason to be.”

Bankers put fair value at 5bp, or up to 6bp, implying a new issue premium of 1bp, at most. According to pre-announcement comparables circulated yesterday, Berlin Hyp green July 2027s and July 2028s were trading at 4bp over, mid, as was its May 2029 noon-green paper.

“We were four times oversubscribed, with little price sensitivity,” said the lead banker. “We even saw some acceleration in demand when we set the terms, with some investors having waited for the final spread before deciding on the size of their order.

“We skipped any intermediate step between 9bp and 6bp because we felt that was what the book merited,” he added. “If anything, the spread ended up a little tighter than the base case of a 7bp spread that I had been expecting.”

The €2.15bn-plus book comprised well over 80 accounts, according to provisional figures, said the lead banker.

“It’s certainly a pretty large book in terms of size and accounts participating,” he added.

However, he said it was hard to tell the extent to which the green element had affected the make-up of the order book, with the bulk of names reflecting traditional covered bond interest.

In spite of the success of the first post-summer trade, syndicate bankers downplayed the chances of much follow-on supply.

“I wasn’t aware of this one until the mandate was announced,” said one, “and I’m not aware of anything else covered.”

Another syndicate banker who expected the market to return to its previous quiet nevertheless said it remains open across the curve.

“I think everything would work,” he said. “Investors have shown themselves to be open to issuance from five to 10 years this year and have gotten used to negative yields.”

Berlin Hyp’s new 10 year was priced at a yield of minus 0.122%.