Oldenburgische Landesbank (OLB Bank) sized its debut sub-benchmark at the upper end of its €250m-€350m range today (Tuesday), but on the back of modest demand, as the lower oversubscription levels witnessed on yesterday’s benchmarks persisted.

The German issuer announced plans for a debut, 10 year sub-benchmark mortgage Pfandbrief last Wednesday, before holding investor calls on Thursday and Friday. Leads Deutsche, DZ and LBBW then teed up the deal yesterday (Monday) with an update confirming the issuer’s plans to approach the market in the near future after successfully concluding premarketing.

They opened books this morning with guidance of the 8bp area for the Aa1 rated 10 year deal, indicating a size of €250m-€350m. After an hour and 35 minutes books above €350m, including €30m joint lead manager interest, were reported, and after two hours and 50 minutes the spread was set at 6bp on the back of orders above €420m, including €75m JLM interest. The size was then set at the upper end of the range, €350m, with €440m of demand, including €75m JLM interest, good at re-offer.

A syndicate banker at one of the leads said the subdued level of oversubscription matched that witnessed on order books for Crédit Agricole Italia and BPCE SFH yesterday, with the Italian attracting over €750m of demand to a €500m no-grow 12 year debut green covered bond and the French issuer building a combined book of above €2bn for a €1.25bn 10 and 20 year trade.

“Sub-benchmarks depend even more than benchmarks on truly fair conditions,” he said, “and the weather was definitely mixed for this one. Yesterday clearly indicated that there was less fizz in the market than was previously experienced in 2021.

“Taking that into account, they fought a very decent battle. We can definitely applaud the outcome of this debut, which will stand them in good stead as they intend to return on a regular basis.”

The leads circulated a variety of comparables in the 10 year part of the curve alongside Monday’s update, including a mix of Aa1 rated benchmarks from Deutsche Pfandbriefbank, triple-A sub-benchmarks, and a Bausparkasse Schwäbisch Hall €500m debut from October. The lead banker said the most appropriate measure of the outcome of OLB Bank’s debut was perhaps its pick-up of 5bp versus the re-offer spread of a €750m 10 year mortgage Pfandbrief from UniCredit HVB on Tuesday of last week (2 March).

“These days everything is trading extremely close together,” he said, “and on a good day, they might price almost together – in a more exuberant market the differential might have been 3bp or 4bp.

“But that 5bp probably makes sense – it reflects a variety of things, such as this being a non-benchmark, a debut, and Aa1.”