Bausparkasse Schwäbisch Hall is set to launch a €500m will-not-grow 10 year mortgage Pfandbrief tomorrow (Thursday), following fellow German building society Wüstenrot in launching an inaugural euro benchmark covered bond this week.

Bausparkasse Schwäbisch Hall is Germany’s largest building society and the new issue will follow the €500m seven year benchmark debut yesterday (Tuesday) of Wüstenrot Bausparkasse, which was the first German building society to issue a Pfandbrief.

“There aren’t that many German building societies making use of this market,” said a banker at one of Schwäbisch Hall’s leads, “and now you’re having two within 48 hours.”

The transaction is also likely to fare well, he said, given the strength of the market – Wüstenrot’s issue was upped from an initially planned sub-benchmark size on the back of more than €1.5bn of demand.

“Schwäbisch Hall will have no problems whatsoever getting their transaction rock solidly placed,” said the lead banker.

Wüstenrot’s seven year was priced at 7bp over mid-swaps.

According to pre-announcement comparables circulated by the leads, UniCredit HVB September 2028s were quoted at 4bp, mid, Berlin Hyp September 2030s at mid-swaps flat, and Münchener Hyp September 2035s at 2bp. Those are the three most recent Pfandbrief benchmarks of eight years or longer, and were launched between 25 August and 8 September at spreads of 6bp-7bp over. DZ Hyp June 2029 paper – from the same cooperative group of which Schwäbisch Hall is a member – was quoted at 2bp.

The lead banker said the new issue is likely to be priced more or less in line with some of the major German Pfandbrief issuers.

“Given the enormous overhang of demand at the moment,” he said, “I think they’ll produce a pretty rich trade in the end.”

DZ held a series of fixed income investor calls for the transaction on 22 and 23 September. Commerzbank, DZ, LBBW, Natixis and UniCredit have the mandate for the new issue.