Berlin Hyp sold its longest mortgage Pfandbrief benchmark today (Tuesday), a €750m 12 year trade larger than its recent issuance, and paid 1bp of new issue premium for its third benchmark of the year. UniCredit is expected tomorrow with a €500m eight year ahead of Thursday holidays.

Following a mandate announcement yesterday (Monday), leads Commerzbank, DekaBank, DZ, JP Morgan and UniCredit this morning opened books with initial guidance of the 2bp over mid-swaps area for the euro benchmark-sized May 2033 mortgage Pfandbrief, rated Aaa. After an hour and a quarter, the leads reported books above €1bn, excluding joint lead manager interest, and after a little over two hours, guidance was revised to minus 1bp+/-1bp, will price in range, and the size set at €750m on the back of more than €1.4bn of orders, including €180m JLM interest. The spread was subsequently set at minus 2bp on the back of more than €1.6bn of demand, pre-reconciliation, including €180m JLM interest, and the final book matched that level.

A syndicate banker away from the leads said the deal had gone extremely well, with its success testament to Berlin Hyp’s status.

“It was interesting in that it was the first time they have gone beyond 10 years, and it was for €750m when they usually do €500m, so it was a little bit different this time,” he said. “They ended at minus 2bp, which implies 1bp of new issue premium, and that was probably warranted by this being their first 12 year, the size, and also the fact that they have been quite active since the start of the year.

“Overall, it was probably the right approach from the issuer and leads, to start with a cautiously attractive starting point and leave a basis point on the table – you can see that from how the book grew to €1.6bn at the end.”

A lead banker said the deal “ticked all the boxes” for the issuer.

“They came down from plus 2bp to reach minus 2bp, which was what we had in mind,” he added, “and reached a good mix of investors. We had just shy of 50 accounts in the book, which is not the most, but with a book of €1.6bn, you’ve not done a lot wrong.”

Syndicate bankers at and away from the leads put fair value at around minus 3bp, with Berlin Hyp January 2031s at minus 4.5bp, mid.

The lead banker noted that the issuer’s intention to print more than €500m was clear from the outset, given a euro benchmark rather than €500m no-grow was announced. Berlin Hyp’s last five euro benchmarks have been for €500m, with its last larger benchmark having been a €1bn three year in August 2019.

Today’s trade is the German issuer’s third benchmark covered bond of the year, while it also sold a €500m sustainability-linked bond – the first from a bank – in senior preferred format last month.

UniCredit Bank AG (HVB) is expected to hit the market tomorrow (Wednesday) with a €500m no-grow eight year mortgage Pfandbrief, after a mandate announcement today. BayernLB, DZ, Lloyds, NatWest and UniCredit are leads.

According to pre-announcement comparables circulated by the leads, HVB benchmarks out from 2027 to 2030 were all quoted at minus 2.5bp, mid. The new issue will be HVB’s third benchmark covered bond of the year, after a €750m 10 year in March and a €500m 15 year in January.

With public holidays in much of Europe on Thursday, tomorrow is expected to be the last day of euro benchmark activity this week.