DZ Hyp is expected to launch only the second euro benchmark of April tomorrow (Tuesday), an eight year mortgage Pfandbrief that is set to follow a €250m 10 year public sector Pfandbrief that was tightened 5bp to be priced at 2bp through mid-swaps today.

DZ Hyp is awaited after its mandate was announced today (Monday), with leads Deutsche, DZ, Natixis, NordLB, TD and UBS set to launch the benchmark-sized transaction tomorrow. The issuer’s last four euro benchmarks have been for €1bn. Its most recent was a €1bn long nine year priced at 1bp over mid-swaps on the back of a final book of €2.1bn on 25 January.

According to pre-announcement comparables circulated by the leads, that March 2030 issue was quoted at minus 3bp, mid, today, while its October 2028s were at minus 3.5bp. The most recent German benchmark, a €500m long six year green Pfandbrief issued by Berlin Hyp on 16 March, was trading at minus 4.5bp.

A syndicate banker at one of DZ Hyp’s leads said there was “no argument” that fair value for the new issue is minus 3bp.

“Let’s see where we end up,” he added.

He said the pricing of DekaBank’s sub-benchmark today bodes well for tomorrow’s trade.

Initial guidance for the €250m no-grow public sector Pfandbrief was 3bp over mid-swaps and the pricing was tightened 5bp to 2bp through mid-swaps on the back of as much as €850m of orders.

The outcome was deemed tight by bankers away from leads Commerzbank, DekaBank and Natixis.

“For covered, it is still a one way street,” said one. “Apparently they were covered within 15 minutes, which is no big surprise – people know they have to be quick.

“It’s quite something to move it by 5bp, which I understand not everyone liked too much, but with €850m in the book, you can’t be doing too much wrong.”

Another syndicate banker said there is “not a lot of thrills” in the levels on offer for the Pfandbriefe, but said DZ Hyp should also do well, being one of the most established names in the market and given the lack of supply. The only euro benchmark covered bond supply so far this month was a €1.5bn eight year for Compagnie de Financement Foncier last Tuesday.

The lead banker for DZ said that it is mere coincidence that the new issue will be in the same maturity as CFF’s, with the eight year tenor chosen for ALM reasons.

“It will be interesting to see if anyone else sneaks in tomorrow,” he added, “but I doubt it.”