Deutsche Pfandbriefbank (pbb) launched its first euro benchmark since January 2020 today (Wednesday), following Berlin Hyp into the five year maturity with a €500m no-grow Pfandbrief today and uncovering a further €1.6bn of post-summer demand.

The mandate for pbb’s deal was announced after the pricing of Berlin Hyp’s €500m no-grow five year mortgage Pfandbrief yesterday (Tuesday) afternoon.

Leads BayernLB, Commerzbank, Erste, Helaba and UBS then this morning opened books with guidance of the 4bp over mid-swaps area for pbb’s €500m no-grow August 2026 mortgage Pfandbrief, with an expected rating of Aa1. After around 35 minutes the leads reported books above €1bn, excluding joint lead manager interest, and after around an hour and 10 minutes they set the price at mid-swaps flat on the back of more than €1.75bn of orders. The final book was above €1.6bn, excluding JLM interest.

Syndicate bankers away from the leads said pbb’s new issue had consolidated the strong reopening initiated by Berlin Hyp yesterday (see separate article for further coverage).

“Both were very solidly handled,” said one. “Pbb’s book may have been €500m smaller, but we’re still talking about a €1.6bn book for a €500m no-grow.”

Another banker said the early moves by the German issuers had paid off, noting that each had paid very low concessions – Berlin Hyp’s was put at around 1bp, while pbb’s was deemed closer to 0.5bp. One syndicate banker put pbb’s new issue concession at zero, but noted that its secondaries left room for interpretation, especially given that the new issue is pbb’s first euro benchmark since January 2020. According to pre-announcement comparables circulated by the leads yesterday, pbb October 2025s were quoted at minus 0.7bp, mid, and its August 2027s at minus 0.9bp.

As with Berlin Hyp’s deal, bankers cited the choice of the five year maturity as a factor in pbb’s success – even if they suggested the whole curve was open for new issuance. One noted that after a €1.5bn five year for CFF on 5 July, a €250m sub-benchmark in the maturity for DekaBank had closed pre-summer supply on 14 July.

“It is a bit the return of the short maturities,” he added. “With absolute yields being as low as they have been for some time, why not take the defensive route?”

Another syndicate banker agreed that five years was a wise choice.

“It’s definitely been a less utilised tenor in 2021,” he said, “and there is certainly a lot of bank and central bank money that needs to be filled up in that bucket.

“We saw a lot of longer maturities being issued early in the year, but with some rates volatility that followed, there was less interest beyond 10 years,” he added. “But if you came with a seven or 10 year, that would work equally well.”

Some bankers were surprised to see the two German benchmarks this week, but now believe the market is ripe for issuance and could see further supply at short notice.

“Considering that we also saw an AT1 today,” said one, “I wouldn’t be surprised to see a drive-by from another German or well known name by Friday.

“September is looking to be busy on a number of fronts,” he added, “so if you do have funding to do and want to be done with it to avoid any bottlenecks, you might as well do it now.”