Evangelische Bank had the market to itself for an inaugural mortgage Pfandbrief sub-benchmark today (Monday), with the €250m six year deal getting away smoothly in spite of conditions that kept other financial institutions away from the primary market.

Plans for the debut – mandated to Commerzbank, DZ and NordLB – were announced on 21 September, with Germany’s largest church bank then holding a roadshow until the end of last week, also taking in ECBC-related events in Seville the week before last.

The cooperative issuer, which has a focus on the church, healthcare and social economy, had total assets of €8.83bn at the end of 2025. Evangelische Bank highlighted its sustainability credentials in its marketing, and these are reflected in the composition of its cover pool, which beyond more typical residential and commercial properties and buildings, includes specialist categories such as elderly care and assisted living facilities, homes for disabled people, and rehabilitation clinic exposures.

Following the roadshow, the leads this morning decided to proceed with launch, although the decision was not straightforward, according to a syndicate banker at one of the bookrunners.

“We felt the market is not the very best – we are not on 10 out of 10,” he said, “but we had done our homework for this one. We knew this wouldn’t have a €700m book and that only those investors who had given us feedback before would come in, but we thought that was enough to get this one done today, and to get it done properly.

“We also had in mind that tomorrow might be a better day, but also with more other trades, and we would perhaps not have the attention from investors that we had today.”

The success of a €500m seven year debut from Luxembourg’s Spuerkeess (BCEE) against a similar backdrop last week also offered encouragement, in showing that a well prepared deal from a niche sector could achieve a decent result, he added, even if Evangelische Bank’s offering was more modest.

The leads therefore opened books with guidance of the mid-swaps plus 35bp area for the €250m no-grow October 2026 Hypothekenpfandbrief, expected rating AAA (S&P). After an initial update reporting books above €300m, including €50m of joint lead manager interest, the leads set the spread at 32bp on the back of more than €325m of demand. The final book was above €340m, including the JLM interest.

“The quality of the book was extremely high,” said the syndicate banker, “so we could have printed €340m. The issuer was very content with the outcome.”

Based on Pfandbriefe of names such as DZ Hyp and MünchenerHyp, and adding a premium for the sub-benchmark nature of Evangelische Bank’s debut, he estimated the new issue premium at around 2bp.

“That’s really OK in this market,” added the syndicate banker.

Distribution was 100% domestic, which was in line with expectations, he said, even if some Nordic demand would have been welcome.

“In the end the spread was not sufficient. So we think it was the spread was right to get this one done – not too tight, not too wide.”

Photo: Evangelische Bank building, Kassel