Bausparkasse Schwäbisch Hall made a successful euro benchmark comeback today (Tuesday), attracting some €2.2bn of orders to a €500m five year green Pfandbrief debut after having postponed a trade last June, while pbb secured €500m of funding in an oversubscribed deal.

Following a mandate announcement yesterday, Bausparkasse Schwäbisch Hall (BSH) leads Commerzbank, DZ, ING, LBBW and UniCredit opened books with guidance of the mid-swaps plus 37bp area for the €500m no-grow January 2029 green mortgage Pfandbrief. After around three-quarters of an hour, they reported books above €1bn, excluding joint lead manager interest, and the spread was later set at 33bp on the back of books above €1.8bn, with the book growing further thereafter.

“This left the issuer to very comfortably price her €500m debut green Pfandbrief across 90 accounts participating, with a final order book of a whopping €2.2bn [including €70m of JLM interest],” said a banker at one of the leads. “A significant number of new investors engaged with BSH in this trade.”

BSH’s five year green debut comes after it last June retreated from issuing a €500m no-grow 10 year Pfandbrief mid-bookbuilding amid challenging conditions for German issuers, and the new issue was deemed a successful comeback.

“The reaction was correct,” said a banker away from the leads. “They went away, came back at another point in time, in another maturity and with the right price – in green – and it worked well.

“We are talking about a triple-A German residential mortgage covered and it was more a matter of market conditions last summer.”

According to pre-announcement comparables circulated by the leads, BSH 2.375% September 2029s were quoted at 16bp, mid, while fellow group member DZ Hyp green 3.375% January 2028s and green 0.75% November 2029s were at 19bp and 24bp, respectively, and DZ Hyp conventional 2.75% February 2031s issued last week were at 32bp. Elsewhere in Germany’s cooperative sector, MünchenerHyp green 3.25% November 2028s were seen at 18bp.

A lead syndicate banker said DZ Hyp’s more recent issuance represented more appropriate comparables than BSH’s old September 2029s, and put fair value at 22bp, based on fair value of 21bp for a new DZ Hyp green five year plus 1bp to reflect BSH not being as well established as its sister institution.

“The market sounding yesterday suggested that an initial concession of around 15bp was appropriate to generate the necessary momentum to carry the trade,” said the lead banker, noting the speed with which the book ultimately grew.

While only a minor amount of demand left the book upon the fixing of the spread at 33bp, with the new issue premium at 11bp more investors decided to join or increase their orders, according to the lead banker.

“The issuer decided in favour of a pricing that rewards investors for the engagement over the recent months,” he said. “The success of this trade is built upon rigorous market analysis and investor work during the second half of 2023.”

Among the 90 accounts involved, 37 were at or below €10m from the German regional cooperative and mutual banking sectors, as well as German and European institutional clients, for an aggregate of over €170m. The lead banker said this contributed to price tension and should contribute to prolonged secondary market liquidity. The German cooperative sector placed 21 orders for an aggregate €248m of demand, excluding JLM interest.

Germany, Austrian and Switzerland were allocated 71% of the new issue, the Nordics 10%, the Benelux 8%, eastern Europe 6%, and others 5%. Banks took 58%, asset managers, fund managers and insurance companies 27%, central banks and agencies 13%, and others 2%.

As well as being BSH’s inaugural green Pfandbrief, the deal is its first five year and the shortest benchmark covered bond it has issued, its previous shortest having been in seven years and with the 10 year part of the curve having been its more common target.

“The pricing decision, the green format and the new funding tenor are a direct function of the issuer’s expressed strategic focus to further building out the long term viability of her funding franchise,” said the lead banker.

“The issuer foresees an increase in her funding activity over the next years and is set to keep engaging investors for the long term,” said the lead banker.

Deutsche Pfandbriefbank (pbb) leads Deutsche, Nomura, NordLB, Santander and SEB opened books for the €500m no-grow January 2029 mortgage Pfandbrief, expected rating Aa1, with guidance of the 60bp area. After a first update putting books above €625m, excluding JLM interest, guidance was revised to the 58bp area on the back of books above €1.08bn, including €125m of JLM interest. The deal was ultimately priced at 58bp on the back of a final book above €1.2bn.

Aareal Bank last Wednesday struggled to get a €500m long four year mortgage Pfandbrief over the line, despite offering a new issue premium put at some 17bp at its 52bp re-offer spread, which was in the middle of guidance. Also, Pbb’s last euro benchmark, a €500m long four year in September, was priced in the middle of guidance at 27bp with order books undisclosed, although it successfully issued a $600m three year mortgage Pfandbrief early last month.

“It’s no secret that, with their CRE exposure, the two are the more challenging German names,” said a banker away from the leads, “and given how Aareal struggled, they did well in being generous from the start.”

He saw outstanding pbb four year paper at 40bp, implying a starting new issue premium of 20bp and final NIP of 18bp.

Today’s issuance of just two benchmarks for €1bn represents a relatively quiet day amid the generally busy start to the year in covered bonds and other financial institutions issuance. Yesterday (Monday) three deals hit the market with four tranches totalling €4bn, after last week’s €13.25bn of supply, with year-to-date issuance now at €18.25bn.

A syndicate banker said that while the covered bond market has proven “extremely constructive”, the pace is likely to remain slightly slower with two or three deals a day more likely than four or five.

“Everyone wanted to be first mover,” he added, “but the density of supply should be lighter now.”

Crédit Agricole Italia (CAI) is set to launch the second Italian and southern European euro benchmark of the year tomorrow, after Mediobanca reopened the sector yesterday (Monday). CAI’s mandate for a €500m no-grow long nine year (July 2033) green OBG was announced today, with Crédit Agricole, IMI Intesa Sanpaolo, Natixis, RBI, Santander and UniCredit as leads.

Mediobanca hit the market yesterday after a mandate announcement on Friday. Leads Commerzbank, Crédit Agricole, IMI Intesa Sanpaolo, Mediobanca, RBI and UniCredit sized the short five year (November 2028) OBG at the targeted €750m and priced it at 65bp, having gone out with guidance of the 70bp area for a euro benchmark-sized trade, with demand reaching up to €1.4bn.

“The success of this new issue, subscribed as to 70% by non-Italian investors, is further demonstration of the market’s confidence in and appreciation of Mediobanca and the growth prospects outlined in the 2023-26 Strategic Plan ‘One Brand-One Culture’,” said Francesco Saverio Vinci, Mediobanca group general manager. “The result only strengthens our resolve to pursue the objectives we have set.”

Intesa Sanpaolo 3.625% June 2028s were trading at around 57bp ahead of the announcement of Mediobanca’s trade and a lead banker put the new issue premium at 6bp-7bp.

Raiffeisen-Landesbank Tirol is planning to issue a €500m no-grow five year mortgage Pfandbrief, having mandated ABN Amro, BayernLB, DZ, Erste and RBI as leads.

Raiffeisen Landesbank Vorarlberg today issued a €300m no-grow four year mortgage Pfandbrief via BayernLB, Erste, LBBW, RBI and UniCredit. After a mandate announcement yesterday, the January 2028 sub-benchmark was priced at 51bp, following guidance of the 56bp area, with the book peaking above €790m and the final book €730m, including €45m of JLM interest.

South Korea’s Shinhan Bank is meanwhile planning a debut mortgage covered bond off a $5bn programme. The planned €500m (KRW720bn, $547m) deal will be in green format via programme arrange BNP Paribas as well as Crédit Agricole, HSBC, JP Morgan, LBBW, Mizuho and SEB.