NordLB returned to benchmark Pfandbriefe after more than three years today (Wednesday) with a green first, a €500m five year trade that impressed, while Westpac launched the biggest euro since January, a €1.75bn dual-trancher. LF Hypotek meanwhile mandated for launch as early as tomorrow.

After NordLB announced its plans a week ago and held investor calls, leads ABN Amro, Natixis, NatWest, NordLB, Santander and UniCredit this morning went out with initial guidance of the mid-swaps plus 4bp area for the September 2026 green mortgage Pfandbrief, expected rating Aa1. After around 55 minutes, books above €1bn were reported, including €125m JLM interest. After around an hour and 25 minutes, guidance was revised to mid-swaps flat plus or minus 1bp, will price in range, on the back of orders above €1.8bn, and unchanged JLM interest. After around an hour and 45 minutes, the spread was fixed at minus 1bp on the back of books above €1.9bn, with unchanged JLM interest. The final book at re-offer was more than €1.8bn.

The deal is NordLB’s first euro benchmark Pfandbrief since January 2018 and the first green Pfandbrief it has issued under the NordLB name – Deutsche Hypo issued green Pfandbriefe before being merged into NordLB on 1 July.

“It was more or less a copy of what we had at Deutsche Hypo before,” said a syndicate banker away from the leads, “but it once more underlines the importance or the positive sentiments of investors towards the green feature.”

The order book is the largest that NordLB has achieved on a Pfandbrief benchmark, according to a syndicate banker at one of the leads.

“The covered bond market is extremely undersupplied at the moment, so it’s really a good time for the issuer to push the button,” he added. “It was green, of course, which really helped again.”

He said the order book was of very high quality, with sizeable demand from outside Germany.

He put fair value for the transaction at mid-swaps flat, implying a greenium of 1bp. Another lead banker saw it flat to fair value, but noted this was an impressive result. He attributed the deal’s success to a combination of factors: the green nature of the bond; thorough preparations, including global and one-on-one investor calls; and investors’ understanding of NordLB’s credit story, including the integration of “flagship name” Deutsche Hypo.

“It was a perfect trade after NordLB’s absence from the market,” he said.

He said the leads had gone out especially early, opening books at 8.40 CET, because of expected heavy supply, including from SSAs such as KfW and EIB, and that the strategy had paid off, as reflected in books being above €1bn in less than an hour.

“After we had the €1.8bn of demand, we were in a position to test the minus 1bp level, with the classic flat plus or minus 1bp language,” he added. “It was interesting to see that did not put a brake on the book but that it grew further.”

After a mandate announcement yesterday (Tuesday), Westpac Banking Corporation leads BNP Paribas, HSBC, UBS and Westpac opened books this morning for the dual-tranche covered bond, rated triple-A, with initial guidance of the mid-swaps plus 13bp area for the September 2028 issue, and plus 19bp for the September 2036 issue. After close to an hour and a half, the leads reported books above €1.2bn for the seven year, and over €500m for the 15 year, excluding joint lead manager interest.

After about three hours and 20 minutes, the spreads were set at plus 9bp for the seven year, and plus 16bp for the 15 year, on the back of aggregate orders above €2.6bn, with the seven year attracting orders over €2bn, including €10m JLM interest, and the 15 year books over €600m, including €10m JLM interest. After four hours, final terms were set, with the seven year sized at €1.25bn on the back of over €2.1bn of orders, and the 15 year at €500m on the back of books above €550m, with unchanged JLM interest on both tranches.

A banker away from the leads noted that the issuer was less frequently in the market but was nevertheless “warmly welcomed”. Westpac’s last euro benchmark was a €1.25bn seven year in April 2019.

Another banker away from the leads put fair value for the seven year at 6bp-7bp, implying a new issue premium of 2bp-3bp, and fair value for the 15 year at 12bp-13bp, implying a NIP of 3bp-4bp.

The Australian deal is the largest euro benchmark covered bond transaction since a €2bn dual tranche trade for BPCE SFH in January.

Eurocaja Rural priced a €700m 10 year inaugural sustainable covered bond at 14bp over mid-swaps today, after leads RBI, Santander and UniCredit had gone out with initial guidance of the mid-swaps plus 20bp area for the Aa1 cédulas hipotecarias.

Länsförsäkringar Hypotek (LF Hypotek) could launch a €500m no-grow seven year covered bond as early as tomorrow (Thursday) morning, after a mandate announcement today. ABN Amro, Credit Suisse, LBBW, SEB and Societe Generale are leads.