A Berlin Hyp €1bn three year green Pfandbrief attracted the most demand of any covered bond since 2020 today (Tuesday), allowing it to achieve a minimal NIP and the tightest spread since January, while SR achieved a solid print and more issuers are set to take advantage of the benign conditions.

Today’s supply – with Berlin Hyp opening books ahead of SR-Boligkreditt – is the first in euro benchmark format since 25 July, when NordLB sold a €500m 3.25 year mortgage Pfandbrief. Its deal came the week after supply from LBBW and others had suggested that, after an at times hectic and torrid first half, euro benchmark issuance conditions could be improving, and the new German and Norwegian confirmed that impression, according to syndicate bankers.

“People are realising that this has been a very active year so far, so we may already have seen most of the supply,” said one, “which means that you need to get your hands on whatever comes along. Investors have piles of cash that are probably growing, so if you are an issuer who wants to approach the public markets, why not do so sooner rather than later to be the first rather than the last one?”

Another syndicate banker said that most investors are back at their desks, while it was clear last week that several issuers were monitoring the market. Further to today’s two deals, Bawag PSK has mandated a 10 year euro benchmark that is expected tomorrow (Wednesday), and the banker said that, should that proceed without a hitch, another new issue from DACH is likely to emerge on Thursday, and that a Nordic deal shorter than SR-Boligkreditt’s long five year could hit the market either then or early next week.

Berlin Hyp was first to announce its mandate after the summer hiatus, doing so yesterday (Monday). This morning, leads Commerzbank, Crédit Agricole, DZ, LBBW and UBS then went out with initial guidance of the mid-swaps plus 1bp area for August 2025 green mortgage Pfandbrief, expected rating Aaa, flagging a euro benchmark size. After less than half an hour, they reported books above €2bn, excluding joint lead manager interest, and after around 50 minutes, they revised guidance to minus 3bp+/-1bp, will price in range, on the back of orders above €3.5bn. After around an hour and five minutes, they fixed the spread at minus 4bp on the back of a book above €4.5bn, and the final order book exceeded €5.8bn, excluding JLM interest.

Berlin Hyp’s order book is understood to be the biggest for a single-tranche covered bond since 2020, and a syndicate banker at one of the leads said that, on top of the auspicious supply dynamics foreseen for the second half of the year, the green nature of the deal and short maturity were key to the magnitude of demand.

“This was a very strong print,” he said. “We had approximately 180 lines in the order book, which isn’t normal. The trade definitely ticked all the boxes you need for a very successfully covered bond transaction.

“Big institutional accounts are telling us that above five years is still difficult,” added the banker, “but three to five fits their expectations.”

He further cited the Bund-swap spread, with Berlin Hyp offering 85.9bp over Bunds, and attractive relative value versus SSAs, noting that KfW, for instance, is expected to price a five year benchmark tomorrow at around mid-swaps minus 30bp in one of the most expensive trades of the year.

According to pre-announcement comparables circulated by the leads, Berlin Hyp non-green February 2025s and February 2026s were quoted at minus 6bp and minus 5bp, respectively, and its green October 2025s at minus 5bp. The leads put fair value for the new issue at minus 5bp, implying a new issue premium of 1bp.

“They could have printed 1bp tighter,” said the lead banker, “but the issuer was quite fair. Starting 1bp tighter, at flat, was also suggested, but the issuer didn’t want to give the impression they might print flat to fair value – bearing in mind that some issues move 5bp from start to finish – and thereby potentially give investors accounts reason to pass on the issue.

“It’s now trading 4bp tighter,” he added, “so the intraday performance is quite good – we’ll see how it opens tomorrow.”

The new issue is Berlin Hyp’s first green Pfandbrief to reach a size of €1bn.

SR-Boligkreditt announced its deal this morning when Berlin Hyp was well underway, going out with initial guidance of the mid-swaps plus 15bp area for its March 2028 euro benchmark, expected rating Aaa. After around half an hour, the leads reported books above €1.3bn, including €95m of JLM interest, and after a little over an hour and a half, they set the spread at 12bp on the back of orders above €1.4bn, with the size then set at €1bn (NOK9.85bn) on the back of a book exceeding €1.7bn.

A lead banker said this represented a “very solid outcome”. According to pre-announcement comparables circulated by the leads, SR October 2026s were at 3bp, June 2027s at 7bp, September 2028s at 9bp, and April 2029s at 10.5bp.

“It looked like a decent result,” said a banker away from the leads, suggesting it was a stronger trade than SR-Boligkreditt’s last euro benchmark, a €750m seven year in March.

The deal is only the second time SR-Boligkreditt has issued as much as €1bn in a euro benchmark.

Bawag’s 10 year expected tomorrow is mandated to BayernLB, Commerzbank, DekaBank, DZ, Erste, ING and Nykredit.