DZ Hyp comfortably got away a €1bn eight year Pfandbrief flat to fair value today (Tuesday), even if some price sensitivity was evident in the book, while a €500m no-grow 10 year conditional pass-through for NIBC is expected to prove enticing to investors tomorrow.

Following a mandate announcement yesterday (Monday), this morning DZ Hyp leads Deutsche, DZ, Natixis, NordLB, TD and UBS went out with initial guidance of the mid-swaps plus 1bp for the benchmark-sized eight year Pfandbrief. After about an hour, the leads reported books above €1.5bn, excluding joint lead manager interest, and after an hour and 25 minutes, they set the size at €1bn and revised guidance to minus 2bp+/-1bp, will price in range, on the back of more than €2bn of orders, excluding JLM interest. The spread was then set at minus 3bp on the back of books above €2bn, pre-reconciliation and excluding JLM interest, and post-reconciliation the final order book was €1.6bn, including €135m JLM interest.

The pricing was deemed flat to fair value by syndicate bankers at and away from the leads, with DZ Hyp March 2030s quoted at minus 3bp, mid, pre-announcement, and October 2028s at minus 3.5bp.

“The plus 1bp guidance was very much in line with what I would expect,” said a banker away from the leads. “It is such a solid and strong name with a number of very good trades in the past year or so that you don’t need to dangle a spread in front of investors to get their attention.

“They had €1.5bn of orders in barely an hour and it was a very strong trade, as I’d expect.”

A lead banker said DZ Hyp and its syndicate were “all smiles” at the outcome.

“The issuer is super-happy to have made its mark with €1bn at plus 3bp in eight year,” he added. “That’s definitely impressive in this market.”

He noted that the size of the order book fell some €400m in the final pricing step, but said that merely reflected the state of the market.

“Given how tightly priced this all is, it’s not surprising,” he said. “German paper is rich and clearly pricing at minus 3bp left nothing on the table, so clearly not everyone will stay loyal from start to finish.

“But with the size of the final book we still had the opportunity to diversify in terms of allocations, which is the position you want to be in.”

NIBC is set to launch its first benchmark covered bond since October 2019 tomorrow (Wednesday), having mandated DekaBank, DZ, ING, LBBW and NatWest for a €500m no-grow 10 year conditional pass-through (CPT) issue.

“There has been a bit of a gap since they last issued, which should be supportive, as it will offer diversification” said a lead banker, “plus there is the spread for a CPT versus a non-CPT.”

According to pre-announcement comparables circulated by the leads, NIBC January 2028s and September 2028s were quoted at 8.5bp, mid, and their October 2029s at 9bp, while among soft bullets de Volksbank October 2031s were trading at minus 2bp and NN Bank July 2030s at minus 0.5bp.

A banker away from the leads said the spread on offer should have investors “biting the leads’ hands off” for the paper.

The new issue will be the first Dutch euro benchmark since NN Bank issued a €500m 10 year on 23 February, while the last Dutch CPT benchmark was a €500m five year in November 2020.