Hamburg Commercial Bank attracted a peak €800m of demand to its first euro benchmark in its privatised guise today (Tuesday), prioritising price on the €500m seven year mortgage Pfandbrief. SpareBank 1 Boligkreditt is expected tomorrow with a seven year benchmark.

Following a mandate announcement yesterday (Monday), Hamburg Commercial Bank AG (HCOB) leads ABN Amro, Commerzbank, LBBW, SG and UniCredit went out this morning with initial guidance of the mid-swaps plus 6bp area for the November 2028 euro benchmark mortgage Pfandbrief, expected rating Aa1. After an hour and 40 minutes, they reported books above €750m, excluding joint lead manager interest. After two hours and 40 minutes, they set the size at €500m and revised guidance to 3bp+/-1bp, will price in range, on the back of books of €800m, including €40m of JLM interest. The spread was ultimately set at 2bp with books in excess of €760m, and the final order book was above €660m, including €40m JLM interest.

A lead syndicate banker said the transaction went well, with the pricing in line with the issuer’s expectations.

“That was one of the main goals of the transaction,” he said, “that they don’t have to overpay.”

The euro covered bond is the German lender’s first since October 2018 and the completion of its privatisation the following month, along with its rebranding from HSH Nordbank to Hamburg Commercial Bank.

The lead banker said one of the reasons the deal did not attract a bigger order book was because of limited line availability among bank treasuries, even if Pfandbriefe were issued under the guise of HSH Nordbank.

“They have been issuing transactions in the senior format – senior preferred and senior non-preferred this year – so it seems they had quite a good following among credit-focused asset managers, especially from abroad,” he said, “but not such a close following by bank treasuries who are large buyers of Pfandbriefe.”

The lead banker noted some spread sensitivity among investors, and put the new issue premium at 1bp-2bp, which he said also reflected the inaugural character of the trade.

“The issuer wasn’t so preoccupied with getting €750m, so we concentrated on getting €500m for a decent price,” he added, “and at plus 2bp, it was a good outcome with a modest oversubscription. The accounts that remained in the book were really good quality – practically no fast money at all.

“All in all, a good result, and we and the issuer are happy with the transaction.”

He said that after receiving positive feedback yesterday, they were pleased to find a stable market and clear window for issuance today, with no other euro benchmarks in the market and ahead of anticipated supply tomorrow (Wednesday).

Sparebank 1 Boligkreditt is expected to hit the market tomorrow, following a mandate announcement today for a seven year euro benchmark via DekaBank, ING, Natixis and UniCredit. The Norwegian issuer’s last euro benchmark was a €1bn (NOK9.7bn) 10 year in May.