Deutsche Genossenschafts-Hypothekenbank launched a Eu500m no-grow seven year mortgage backed deal today (Tuesday), the longest dated benchmark German Pfandbrief this year after three of its peers tapped the five year part of the curve last week.

Leads BayernLB, DZ Bank, NordLB, UniCredit and WGZ Bank went out with initial price thoughts of the 5bp over mid-swaps area, set guidance at the 4bp over area, and then fixed the re-offer spread at 3bp over.

The deal is the fourth Pfandbrief of 2013 as German issuers have provided the bulk of core euro supply so far, with two mortgage issues and one public sector backed deal having hit the market last week. Re-offer spreads have been tight, with Aareal Bank and Deutsche Hypothekenbank pricing Eu625m and Eu500m five year mortgage backed issues, respectively, both at 1bp over, and Deutsche Kreditbank selling a Eu500m public sector Pfandbrief at 3bp over on Friday.

A Commerzbank mandate for a new SME backed covered bond is still outstanding after the issuer went on a roadshow last week, although as a structured issue a deal would not add to the Pfandbrief tally. Barclays, Commerzbank, Credit Agricole and UniCredit have the mandate.

A syndicate banker had suggested that Pfandbrief issuers should consider offering curve extension trades offering a bit more yield, and DG Hyp’s benchmark is the first Pfandbrief of 2013 to go beyond five years.

A lead syndicate official said that this did not make that much difference in terms of pricing because the curve is fairly flat between five and seven years, and that a five year may have come around 1bp tighter.

He said the deal went very well and that more than Eu1bn of orders were placed.

Several syndicate bankers away from the leads were more interested in a new issue for Ireland’s AIB Mortgage Bank today, saying that DG Hyp’s deal would be a typical “Germanic affair”, allocated mainly to German-speaking accounts with possibly some involvement from Asian accounts.

One said that 3bp over was a tight spread, but not surprising.

“I’m not sure how much tighter these German issues can come,” he said. “It’s only a function of supply and demand.”