Deutsche Pfandbriefbank (pbb) found the going smooth in dollars today (Wednesday), pricing a $750m (€657m) three year Reg S mortgage Pfandbrief around fair value on the back of close to $900m of orders, in the first European dollar benchmark covered bond priced off SOFR mid-swaps.

Leads Citi, Credit Suisse, Goldman Sachs, NatWest and Nomura priced the issue at 43bp over following initial guidance of the 45bp area.

A syndicate banker at one of pbb’s leads described the transaction as conservative, but contrasted the situation in the dollar market with euros – where issuers today found conditions tough – and noted that the German issuer has typically issued in the three year part of the curve when visiting the dollar market.

“Net-net, it was a pretty successful deal,” he said. “The book isn’t the biggest pbb has had in dollars, but it’s still very nice to be approaching $1bn and $750m was the maximum they could do given their pool and refinancing need.”

The transaction comes ahead of the redemption on 31 May of a $600m three year deal issued in May 2019.

“We were able to tighten a couple of basis points and land flat to fair value or maximum 1bp back of it,” added the lead banker.

He said fair value was hard to assess, but noted that the most recent dollar benchmark covered bond, a $2.5bn five year for CIBC issued on 11 January, was trading at 48bp-50bp and, with the curve between three and five years worth around 10bp and pbb typically trading up to 5bp back of such a name, fair value was around the ultimate re-offer level.

“It was relatively attractive pricing to euros,” added the lead banker, “just a couple back – we don’t usually get these deals done through euros, given it’s a CBPP3-eligible issuer.

“We’re very pleased with the result.”

The deal is the first dollar benchmark covered bond from a European issuer to be priced off SOFR mid-swaps – a practice begun by Westpac in November – and the lead banker said this continued pbb’s opportunistic and innovative behaviour – citing, for example, the German in September 2020 being the first non-UK European issuer to sell a Sonia-linked benchmark.

“They continue on the path of issuing in a diversified currency range,” he added, “and being able to use the new benchmarks to access those markets.”