A €750m long six year for Münchener Hypothekenbank today (Monday) confirmed the strong position of German names in prevailing market conditions, in achieving a limited new issue premium with the support of domestic retail investors attracted to current coupons, according to a lead banker.

Leads BayernLB, BNP Paribas, Commerzbank, DZ, Helaba and Rabobank opened books this morning with guidance of the mid-swaps plus 8bp area for a euro benchmark-sized August 2029 mortgage Pfandbrief, expected rating Aaa. After around an hour and 40 minutes, the leads reported books above €720m, including €135m of joint lead manager interest, and after around two hours and 20 minutes, they set the spread at 6bp on the back of more than €800m of demand. After a further 35 minutes, the size was set at €750m on the back of more than €950m of orders good at re-offer.

A syndicate banker at one of the leads put the new issue premium as low as 1bp.

“It’s the lowest new issue concession since the Credit Suisse fiasco,” he said. “It’s due to a mixture of three elements: a very constructive market, of course; this being Munich Hypo; and German 1k-denominated Pfandbriefe.”

The retail bid enjoyed by the German product had already been witnessed in its support for DZ Hyp and BayernLB to achieve limited new issue premiums recently, he noted, with prevailing coupon levels rekindling interest.

“In the current environment, there is an element of some extra demand that helps the bonds to perform in secondary and in that context helps to reduce NIPs in primary,” he added, “otherwise starting at 8bp with fair value at 5bp would have looked ridiculously tight in the context of what we’ve seen recently.”

According to pre-announcement comparables circulated by the leads, a €500m long six year (May 2029) mortgage Pfandbrief issued by BayernLB last Wednesday was at 2bp, having been re-offered at 4bp, while a €1.25bn Commerzbank six year last Thursday had tightened from 10bp to 8bp. MünchenerHyp February 2029s and green February 2030s were seen at plus 4.5bp, while BayernLB May 2029s were at 3bp, Helaba September 2029s at 3.5bp and LBBW July 2029s at 1.5bp.

MünchenerHyp last sold a euro benchmark in January, a €1bn short three year issue at mid-swaps minus 9bp.

Today’s deal comes after nine new euro benchmarks totalling €7.25bn last week, despite Monday having been a public holiday in much of Europe, and with Crédit Mutuel having sold a rare Friday benchmark, a €1bn six year.

A syndicate banker said two are three names are firmly in the frame for issuance this week.

“The market is good,” he added, “the Easter break is done, and we have a new quarter. Maybe the overall bear sentiment in the rates market will put a bit of a brake on things, but with yields now climbing higher, I’d even see this as an opportunity to print some covered bonds with coupons at absolutely and relatively high coupon levels from a historic perspective.”

South Korea’s KEB Hana is meanwhile in the pipeline with a first “SME empowerment” social covered bond after investor meetings starting today. BNP Paribas, Citi, Crédit Agricole, HSBC and SG have the mandate for a planned three to five year covered bond.

Finland’s Pop Mortgage Bank is due with a sub-benchmark after investor meetings and calls that began on Friday. LBBW, Nordea and Swedbank have the mandate for the five year issue.

Many market participants will be in Helsinki this week around the European Covered Bond Council plenary on Wednesday.

(See you there!)