The survey’s overall score, reflecting conditions for both covered and unsecured bonds, is 11, down from 17 in December, but still the second highest since the survey was launched in December 2022. Pfandbriefe’s score of seven has halved from the last survey, but is only the second positive score recorded, while for unsecured, the score fell from 22 to 16.

In the Issuance Climate survey, vdp members assess a variety of drivers in the capital markets environment and their impact on issuance plans over the past six months, today and in the coming six months, and assign these a score from minus 100 to plus 100. These factors are then weighted and combined into an aggregate score for Pfandbriefe, unsecured bonds and overall issuance. Thirty-four issuers contributed to the latest edition.

“The vdp Issuance Climate survey reflects the currently upbeat mood among capital markets experts,” said Steffen Stachna, senior manager, capital markets, at the vdp (pictured). “Regarding the coming six months, the outlook is slightly subdued, but all in all, still positive.”

Sources for charts: vdp, Börsen-Zeitung; Graphic: www.igrafik.de

Contributing to the current high score of 71 for investor demand for Pfandbriefe – only slightly down from 78 in December and well above the score of 22 expected at that time for the first half of the year – is a score of 37 for oversubscription levels at present (46 in December). This has come at the same time that Pfandbrief issuance, at some €35bn, has matched last year’s volumes.

“That’s in spite of the geopolitical developments we’ve seen this year, particularly in the Middle East, which led to fewer issuances in March and April,” said Stachna. “Indeed, we saw sufficient demand to comfortably absorb a large portion of the funding requirements foreseen for the whole year – even in longer maturities.

“We expect the second half of the year to be quieter, as is traditional,” he added. “We could expect that to have a stabilising effect on spreads, which have actually been quite stable for the year.”

Investor demand is expected to moderate over the next six months, with a score of six for Pfandbriefe. Oversubscription levels are seen remaining buoyant, but spreads against swaps and particularly Bunds are expected to weigh on demand levels.

The interest rate trend is a strong plus across secured and unsecured products, at 59, and much higher than the score of five recorded in December. The vdp also asked respondents their views on the direction of yields and just over 60% expect the 10 year Bund yield to rise slightly from around 3.0% currently to between 3.0% and 3.2% by year-end, with yields having already risen some 20bp this year – something not widely forecast at the start of this year.

In the first five months, new Pfandbriefe totalling €32.2bn were issued, up 2% versus 2025, with mortgage Pfandbriefe contributing €23.8bn (up 6%) and public Pfandbriefe €8.4bn (down 8%). Benchmark Pfandbriefe of €20bn were issued up to the end of May – accounting for around one-fifth of overall benchmark covered bond issuance.

According to Stachna, some €25bn of Pfandbrief issuance is expected in the second half of the year, more than half of it in benchmark format, with benchmark Pfandbrief issuance for 2026 therefore ending at around €35bn.

The only previous covered bond in EU Green Bond (EuGB) format has been a €1bn three year issued by Nordea Mortgage Bank in March. Take-up of the format by banks overall has been only gradual, as they have worked to understand and meet the requirements of moving from issuance under the ICMA Green Bond Principles to the EU Green Bond Standard.

“The discussions around the Taxonomy and then bringing the standard to life was a very long process,” said Anne-Laure de Saqui de Sannes, head of financial solutions at BPCE. “Like many others, we were initially kind of sceptical, but we followed developments and, with the help of the Natixis Green Hub, focused on what we would be able to do.

“And once it was established and we knew exactly what it would mean to issue an EuGB, it was a natural step for us, because it perfectly fits the strategy that we have at Groupe BPCE level, our transition plan and the decarbonisation of the economy.”

BPCE has also been keen to be at the vanguard of new sustainable developments in the bond market, as evinced by its issuance: the latest deal is BPCE SFH’s seventh green covered bond, while a variety of entities of the French group have issued a range of other green and social bonds, some of theme themed, as well as an innovative “defence bond” in September 2025.

“As an issuer in the sustainable finance market, keeping being innovative and offering scalability to investors is really close to our hearts at BPCE,” said de Saqui de Sannes, “and being one of the first to issue an EuGB was a way to achieve that.

“It’s the highest standard in sustainable finance right now.”

While the first issuers of EuGBs have at times found the process – including interpretation of the new standard and interactions with regulators – challenging, BPCE found the process relatively smooth, according to de Saqui de Sannes, with the issuer able to learn from the examples of preceding EuGB issuers as well as benefit from Natixis’s experience in such issuance.

“Regarding data and the full Taxonomy alignment,” added de Saqui de Sannes, “the key thing is that, as a French bank, we have already released our Green Asset Ratio, and all the assets we use in this cover pool are within the GAR. So we already had some data and on that side things went well.

“What we did have to double-check and explain to the external reviewer was how we were handling climate risks and evaluating physical risks – here, we have a methodology based on data sourced externally.”

Preparing the associated EuGB factsheet meanwhile took less time than preparing a new green framework, according to de Saqui de Sannes.

“It was a question of being perfectly straightforward and clear – not saying too much, but not saying not enough, either.

Some quirks of the EuGB standard nevertheless emerged during preparations. For example, under the regulation, BPCE must publish the first allocation report either one calendar year after issuance or by 31 December, meaning that it cannot be aligned with its ICMA-aligned green bond reporting, which de Saqui de Sannes said is not very practical.

“But overall,” she concluded, “we did so much work on Taxonomy alignment before the EuGB, and it’s something we have placed such emphasis on, that the whole process was frankly easier than I would have expected, even if it still involved a lot of work many different people.”

A combination of factors played into BPCE’s decision to focus its EuGB issuance on BPCE SFH and French residential mortgages in its cover pool.

“Firstly, it makes sense because we finance more than €369bn of mortgages, and buildings are responsible for some 40% of carbon emissions,” said de Saqui de Sannes. “Secondly, it is much easier to demonstrate Taxonomy alignment for some activities than others, and we chose 7.7 – acquisition and ownership of buildings – because we are more advanced for this when it comes to the GAR, also given the importance of mortgages on our balance sheet.

“And thirdly, we had to ask ourselves, what will be the narrative and the link for investors in our EuGB strategy? We thought it would be rather confusing to, for example, issue one unsecured EuGB but the next then be not EuGB but ICMA, and hence to say that the new standard could apply to any instrument. We wanted to be perfectly clear in our plans and – since we are a big issuer of covered bonds – it made sense for us to use the standard only for covered bonds.”

Many banks have focused their green bond issuance in unsecured instruments where the format may offer a greater de-risking effect in execution and any greenium may be more evident than in than in the more dependable and tighter covered bond asset class. The resultant lack of green covered bond issuance has contributed to demand for BPCE SFH’s issuance, according to Cédric Perrier, head of medium and long term funding, Groupe BPCE.

“This is evident each time we meet with investors,” he said. “They are asking, when is your next green covered bond? Also, within our group, CFF is not issuing green. So it’s really something that ticks a lot of boxes for us internally and vis-à-vis the market.”

BPCE teed up its inaugural EuGB issuance when it published its factsheet on 5 May and, with the issuer typically hitting the market at this time of year, a debut issue was anticipated. The issuer meanwhile felt comfortable approaching the market without a roadshow given its existing green bond credentials and the growing volume of EuGBs, including Nordea’s in covered bond format.

This gave BPCE an added bonus of being able to move quickly in a market that has this year proven volatile on the back of the Iran war and periodic outbursts from US president Donald Trump.

“Being out in the market for more than a day or half a day has been getting trickier and trickier,” acknowledged Perrier.

He noted that the market in general and specifically French government bonds had been relatively stable going into the new week, while the start of the new month offered a good dynamic vis-à-vis investors.

The six-and-a-half year maturity, he added, was also on the safer side – BPCE SFH’s last two green bonds, in May 2024 and June 2025, were 10 year deals. As well as suiting the market and issuer ALM needs, the shorter tenor chosen this time mitigates potential challenges issuers might face in meeting EuGB asset eligibility requirements on longer dated issuance.

On Monday morning (1 June), leads Danske, Deutsche, DZ, ING, Natixis, NordLB, Santander and Swedbank opened books with guidance of the mid-swaps plus 43bp area for a euro benchmark-sized January 2033 issue, expected ratings Aaa/AAA (Moody’s/S&P).

After around an hour and a half, the leads reported books above €3bn, including €475m of joint lead manager interest, and after around two-and-three-quarter hours, they set the spread at 36bp for a size of €1.25bn-€1.5bn on the back of books above €4.4bn, including €545m of JLM interest. The size was after around three hours set at €1.5bn on the back of more than €5bn of orders.

The final book was above €5bn, with some 120 accounts allocated.

“I was expecting a nice transaction, but having more than €5bn in the book was not a given,” said Perrier.

Banks and private banks were allocated 52%, asset managers 27%, central banks and official institutions 15%, insurance companies and pension funds 5%, and others 1%. Germany, Austria and Switzerland took 24%, the Nordics 23%, the Benelux 16%, France 13%, southern Europe 12%, the UK and Ireland 10%, and others 2%.

“The Nordic share was very strong,” highlighted Perrier, “much more than we have seen previously – they also received good allocations, because the quality was high.

“That’s probably down to a combination of factors: they take ESG very seriously, we have made some marketing efforts there, we had the support of two Nordic leads, and they may have also been educated by Nordea’s EuGB.”

Allocations to accounts deemed green-oriented accounted for 61% of the paper, compared to 65% and 67% on BPCE SFH’s last two green covered bonds.

The pricing of 36bp over mid-swaps was seen as flat to fair value. The perennial challenge of calculating any greenium was further complicated by the magnitude of the trade, according to Perrier.

“In the beginning, I had €1bn to €1.25bn in mind,” he said, “but the quality of the order book was so good, and because this was our inaugural EuGB, we decided to go for a bigger size and have a very visible transaction, as well as ease the allocation process.

“So it’s difficult to call a greenium – maybe we could say 1bp – but in this context a successful and larger transaction were the priorities.”

The proposal to cut the risk weight under the Standardised Approach from 10% to 5% was aimed at defending covered bonds’ relative position vis-à-vis securitisations, some of which could achieve as low as 5% under the package of measures being negotiated, which includes revisions to legislation including the Capital Requirements Regulation (CRR) and Securitisation Regulation, among others, aimed at boosting the securitisation market.

However, the position adopted by the ECON Committee upon a vote on Tuesday omitted the proposed halving and any other changes to the treatment of covered bonds that would help maintain their relative position versus securitisations. This is set to be the Parliament’s position in the forthcoming trilogue with the European Commission and Council – neither of which have included such provisions for covered bonds in their positions – to arrive at the final texts.

By way of consolation and compromise, the Parliament’s text requires the Commission to conduct a specific review of the impact of the securitisation reforms on covered bonds five years after they come into effect, and consider whether any adjustment to covered bond risk weights is necessary. Meanwhile, the European Banking Authority is after two years also set to more broadly consider any effects on the covered bond market of the securitisation reforms as part of an overall review of the package.

The decision to omit the improved covered bond treatment from the position adopted by Parliament is understood to have reflected political considerations among the various voting blocs as much as the merits of the proposed amendments. The rapporteur in charge of the package, German MEP Ralf Seekatz of the European People’s Party (EPP), secured a majority in favour (33 to 25) with the support of the Renew and Socialists & Democrats groupings, rather than others further right of the EPP that may have supported the covered bond amendments.

Some market participants were downbeat about the outcome. Cas Monsema, senior financials analyst at Rabobank, said that while the door has been left open a little, the possibility of any lowering of risk weights and improved prudential treatment for covered bonds is now “quite the long shot”.

However, while the covered bond industry had been lobbying for the asset class’s risk weights to be commensurately improved with those of high quality securitisations, speakers at a European Covered Bond Council plenary in Stavanger last week were more ambivalent. ECBC secretary general Luca Bertalot highlighted the proposals for reviewing treatment, for example.

“We have gained a review clause,” he said on Wednesday, “with the European Parliament proposing that covered bond treatment should be properly assessed.

“Overall, it’s a good result and we remain well positioned from a political point of view.”

Other speakers expressed mixed views on the implications for covered bonds.

“In the marketplace, investors will always seek relative value, so the new regulatory treatment of securitisation will in my view have an effect,” said André Küüsvek, president and CEO of the Nordic Investment Bank. “So we should not ignore it.

“But all in all, I tend to think that even though there has now been this news on the regulation, any shift will still be gradual. As to NIB’s own investment portfolio, I think for us, we would still be more of a covered bond-minded investor.”

Friedrich (Fritz) Luithlen, global head of debt capital markets and syndication at DZ Bank, downplayed the impact – at the same time as acknowledging that bank treasuries would be well advised to look at adding securitisations to their portfolios.

“Just like the introduction of corporate credit in treasury books wasn’t a problem for the covered bond market, I don’t think it will have a significant impact, and certainly no cliff effect whatsoever,” he said, also highlighting how much liquidity banks currently have available to deploy.

Bertalot also noted that leaving covered bond treatment untouched obviates the need to reopen the covered bond dossier in Brussels, which chimes with both the Commission’s stance and the industry’s: the ECBC has formalised its response to the EBA report, telling the Commission that the directive should be left alone for now.

“We are convinced of the added value of the covered bond directive,” he said in Stavanger, “but we now need to secure stability and continuity for the market. There is really no need to reopen at this stage the Pandora’s Box of the directive.”

Photo: Luca Bertalot in Stavanger; Credit: EMF-ECBC

You can download a pdf version of the roundtable here.

Participants in the roundtable, which was held on 9 April:

• Christoph Anhamm, MD, DCM Origination, NORD/LB
• Anton Fuchs, Treasury/Banking Book and Funding, Berliner Sparkasse
• Katja Karstaedt, Treasury/Liquidity Management and Funding, Sparkasse Bremen
• Christian Schaefer, Director Institutional clients/Trading/Treasury, Kreissparkasse Köln
• Andrej Schiebler, Treasury/Head of Banking Book and Funding, Berliner Sparkasse
• Giancosimo Walter, Treasury, Sparkasse Dortmund
• Neil Day, Managing Editor and moderator, The Covered Bond Report

Neil Day, The Covered Bond Report: Christoph, perhaps you can kind of set the scene a bit. What are the overarching and key characteristics of the savings banks sector that you would highlight?

Christoph Anhamm, NORD/LB: To start with, it’s worth noting that the concept of savings banks is about 200 years old. And ever since then, it has spread across the country, meaning there are savings banks in every single village, county and city — currently, we have something like 383 different savings banks in Germany. That’s about 20% less than 15 years ago, which is a sign of the consolidation underway in the sector. Nationwide, there are roughly 6,700 branches and 4,000 self-service points, again, less than 15 years ago, and another sign of cost efficiency and consolidation.

One of the main characteristics of this group is actually its coherent depositor protection system, of which not only the savings banks themselves are members, but also the Landesbanken and the Landesbausparkassen, so it’s a widespread system. It has always proven to work well in the event of a crisis of a particular savings bank, and in the case of Landesbanks.

In terms of market share, the savings banks have about 30% of the retail market in Germany, and also around 30% of the residential housing market. In terms of money transfers, the savings bank sector has a market share of about 40%-45%, which indicates how important the sector is for retailers, as well as for SMEs and smaller sized companies.

And then regarding today’s main topic, about 40 different savings banks have a licence to issue Pfandbriefe. Of the 10 largest, six are already frequent issuers of larger sized transactions, meaning sub-benchmarks and benchmarks.

Day, The CBR: And then turning to the individual issuers, what would you each highlight that is distinctive about your particular institution, for example, the ownership structure, regional activity, credit profile?

Katja Karstaedt, Sparkasse Bremen (pictured): We are one of the few savings banks that operates as a public limited company. We were founded 200 years ago by citizens for citizens of the city of Bremen, in the form of an economic association. In 2004, the economic association was converted into a holding company, whose sole asset is Die Sparkasse Bremen AG.

Special in the composition of our administrative board is that it consists predominantly of Bremen businesspeople and no politicians. So we have more economic competence than political authority in our administrative board to manage our Sparkasse.

We are a savings bank in a city state, so we are particularly committed to the residents of the city of Bremen and the immediate region around Bremen. That’s reflected in our credit profile. Our loans are residential in nature, and like our corporate lending business, firmly rooted in our region, Bremen and the surrounding area.

We are also deeply rooted in our local community. That’s reflected in our social commitment in over 600 institutions in our city.

Lastly, a feature of our savings bank is that we are working with very flat hierarchies, because we are a network organisation.

Christian Schaefer, Kreissparkasse Köln: As the name suggests, we are based in Cologne. Our headquarters is right in the centre of the city, at Neumarkt. However, the name is somewhat misleading, because our sponsoring public entities are the four counties surrounding the cities of Cologne and Bonn. In fact, the name derives from the former Landkreis Köln, an administrative area that existed until 1975 and was then dissolved as part of a territorial reform, comprising parts of Cologne and what is today the Rhein-Erft-Kreis. That is why we also offer our services in the city, still maintaining three branches, but this area is actually the core business territory of Sparkasse KölnBonn. That is the historical and structural context that explains why there are two savings banks with the name Köln in it, both operating in and out of Cologne.

But accordingly, we focus on the economically strong surrounding region of these two cities, where people have a higher disposable income than the rest of North Rhine-Westphalia, and our business area is larger than the island of Mallorca.

Last year we surpassed the €30bn balance sheet threshold, and therefore the next step is the transition to the direct supervision of the ECB and the SRB in the coming year.

That’s pretty much us in a nutshell.

Giancosimo Walter, Sparkasse Dortmund: Sparkasse Dortmund is located in the Ruhr Valley, which is a very densely populated region in Germany. It was in the past famous for the steel and coal industry, but we underwent some structural changes, so the industry is not that strong here anymore. Here in Dortmund, the area evolved into one with more service-oriented industry, logistics and more technology, which made the regional economy less dependent on a single industry. We as Sparkasse Dortmund also supported this structural change, e. g. the technology park here in Dortmund to foster start-ups, which also helped to sustain jobs in other areas.

Sparkasse Dortmund operates in Dortmund, but in 2022 merged with the Stadtsparkasse Schwerte. Schwerte is a city of around 50,000 people right next to Dortmund — Dortmund has a population of around 600,000. We are now operating only under the name of Sparkasse Dortmund.

Anton Fuchs, Berliner Sparkasse: First of all, our ownership differs from that of other German savings banks. As Berliner Sparkasse, we are part of the German Savings Banks Finance Group (Deutscher Sparkassen- und Giroverband, DSGV), and also the joint liability scheme that was mentioned earlier — in that respect, we are no different to the other savings banks. However, we are the only savings bank that is fully owned by all the other savings banks in Germany. This also means that our supervisory board includes board members from other savings banks, i.e. banking professionals, and — as mentioned earlier regarding Sparkasse Bremen — this provides additional expertise and stronger governance.

BSK 1818 AG is the sponsor and originator of Berliner Sparkasse. We have this for legal reasons. We use BSK 1818 AG to issue securities and we conduct our main client business through Berliner Sparkasse, the brand of our company established in Berlin.

Day, The CBR: That’s different to when you participated in last year’s roundtable.

Andrej Schiebler, Berliner Sparkasse: Indeed, we changed our name last year. The name of our sponsor and originator was until July 2025 Landesbank Berlin AG. The new name that we have chosen is BSK 1818 AG, which reflects the name of Berliner Sparkasse and the year in which it was established. With this change, we have left behind our history as a larger Landesbank in the early 2000s.

Day, The CBR: Christoph, how might some of the features the issuers have highlighted affect the way the savings banks are positioned in the market, vis-à-vis each other and also other Pfandbrief-issuing banks?

Anhamm, NORD/LB (pictured): Besides the different ownership structures, each and every savings bank is characterised by the economic structure of the region in which it is active, the main industries and businesses of the region, and also by the main competitors it faces locally, which could be other regional banks, commercial banks, or, to some extent, also Landesbanks.

Savings banks’ regional nature is one feature investors can focus on. They don’t have to look at the whole of Germany; if they like, for instance, Munich, but not Frankfurt, they can buy one and not the other. So they can take a view in that respect based on their opinion of one region or another.

What is generally true of the savings banks and noteworthy is that on average they have a lower share of commercial real estate assets in their cover pools. It varies, of course, from bank to bank, but for non-savings bank issuers, CRE exposure in cover pools is on average 28%, whereas for savings banks, the average is about 10%. It varies between around 5% up to a maximum of something in the mid-30s, but looking at the main issuers today, it is around 10%-15%. A key criticism of Pfandbrief issuers, particularly from foreign investors, is that they often have too high a share of CRE exposure, and the savings banks can respond to that in a positive way, given the low proportion of it in their cover pools.

You can argue that the frequency of issuance by savings banks, due to their size, isn’t as high as that of the larger banks, which is sometimes seen as a less positive aspect by investors, and also that sub-benchmarks might not be as liquid as benchmarks — but I believe we will discuss those topics more later on.

Day, The CBR: Christoph, you already referred to how many of the top savings banks are active in sub-benchmarks and benchmarks. How has such issuance developed?

Anhamm, NORD/LB: This is a sector characterised by significant growth rates. In 2023, savings banks issued just three larger sized transactions, meaning sub-benchmarks and benchmarks. In contrast, last year, we had 11. In the old days, we had two or three savings banks being active. Now we have 10. And that number is probably increasing: we are quite positive about at least one more issuer that yet hasn’t issued a sub-benchmark or benchmark coming to the market with one this year, and then there are another one or two in the pipeline, probably for 2027. So this is an ongoing growth story.

The overall amount issued so far this year is just three transactions totalling €1bn, all of which came in February. That is less than the four deals seen in the equivalent period last year, but, for whatever reason, savings bank are typically more active issuance-wise in the second part of the year than the first. This could be because they gain a better idea of their exact funding needs as the year develops, since savings banks are typically very well-funded through deposits, and so whatever arises in terms of new business, for example, may determine any additional funding needs.

Day, The CBR: How has your issuance developed?

Fuchs, Berliner Sparkasse: Starting with last year, 2025 was another successful year in market funding for us. We issued two syndicated sub-benchmarks. The first, in January, was a €250m public sector Pfandbrief with a tenor of five years. The second, in October, was a €300m seven year mortgage Pfandbrief. Both transactions were very successful. We had strong participation from Germany, including typical German investors, bank treasuries and savings banks, which is very important to us. We also saw a high proportion of official institutions, as well as some demand from abroad, which was noteworthy.

This year, we haven’t yet issued a syndicated Pfandbrief. We are a regular issuer of covered bonds, with 12 sub-benchmarks outstanding. We also aim to issue at least one syndicated sub-benchmark Pfandbrief this year, too, but this will be later in the year.

We kicked off 2026 by issuing 11 senior preferred and senior non-preferred private placements. We have clear MREL targets and timelines for achieving them, so it made sense for us to start with senior funding already in the first quarter. Senior markets were very favourable at that time, so it was logical for us to start with senior and then do the covered later. The timing depends on broader considerations, and our January issue last year shows that it is not typical for us to issue later in the year.

Walter, Sparkasse Dortmund (pictured): We have been active on the public market since 2024, so we’re relatively young in comparison to some other savings bank issuers in this roundtable. Our last issuance was in March 2025 and it was very successful. Like Berlin, the backbone of our investors are the German ones, also from the savings bank sector. But we were very happy about the interest from foreign investors, with 30% of demand coming non-German accounts, from all across Europe, also from the Nordics — I think the investor marketing was very successful in this area.

We typically want to issue such bonds every 12 to 18 months — we are only focused on mortgage covered bonds. We are planning to issue one bond this year — so there could be something coming soon.

Schaefer, KSK Köln: 2025 was our comeback year in the capital markets. Early in the year, we returned after a prolonged absence, as the first German savings bank issuer of a Green Pfandbrief in sub-benchmark format. At the same time, this transaction represents the first Green Pfandbrief issued by a savings bank that is backed exclusively by retail mortgage loans, i.e. traditional owner-occupied residential housing finance. This issuance was voted best sub-benchmark deal of the year by GlobalCapital in Seville last September. This means that we more than achieved our objectives for 2025.

Looking ahead, as I said before, having now become the first municipal savings bank in Germany to surpass a balance sheet volume of €30bn, we expect to maintain our regular presence in the capital markets going forward, to support our future growth trajectory. It’s highly likely that we will return to the capital markets again this year, but with a conventional sub-benchmark issuance.

Karstaedt, Sparkasse Bremen: We issued our second sub-benchmark Pfandbrief in October 2025. We are also relatively new in this market, as our first sub-benchmark issue was in 2024. We wanted to enter the capital market with a sub-benchmark Pfandbrief to enhance our refinancing strategy.

We are quite happy with our experience so far. Last year we had only a short time to plan our issuance, but we achieved distribution of around 90% in Germany and 10% in other countries, and reached new investors. That was very good for our refinancing plans.

For 2026, our focus is to continue the expansion of our cover pool, because we want to continue to issue in the capital market in the near future. We are currently working very intensively to issue also a Green Pfandbrief, although a smaller one, not in sub-benchmark format. We have already completed the framework and the second party opinion. We wouldn’t expect to issue another sub-benchmark Pfandbrief until at least 2027 to cover our refinancing need in addition to our healthy customer deposits.

Day, The CBR: Christian, what was the rationale for KSK Köln returning to sub-benchmark Pfandbrief issuance?

Schaefer, KSK Köln: Our last previous sub-benchmark had been in 2016. The reason we stopped being a regular issuer was that we had a lot of retail funding coming in. This started right after the euro crisis and accelerated during Covid, so there was no need to go to the capital markets.

But in 2018 we started collecting energy performance certificates and so generated a huge green cover pool, and last year we thought it was time to tap into this potential and issue a comeback covered bond in green format. Given our current growth trajectory, we want to maintain this issuance. It will not always be in green format — this year, as I said, we will have a traditional sub-benchmark, but maybe green the following year.

Day, The CBR: Christoph, you touched on the pros and cons of benchmarks versus sub-benchmarks earlier. What are the key considerations here? And how can we expect the sector to develop in this regard?

Anhamm, NORD/LB: One of the key characteristics of savings banks issuance, as mentioned, is that aside from the larger institutions, issuance is typically every 12 to 18 months or thereabouts. That’s why not all the 10 active banks are out every single year — there may be six this year, or eight next year, for example. This is due to the fact that they simply have limited balance sheet sizes — large, but limited, due to their excellent access to the retail market via deposits and term deposits. At the same time, they want to diversify their investor base away from that typically reached via private placements, into a broader investor base in the institutional sector, as well as other savings banks as investors or other second tier investors, and clearly foreign accounts.

The big and perennial question then is whether to issue a benchmark or a sub-benchmark. In this regard, it’s worth bearing in mind individual balance sheet sizes and what it then means for an institution to issue a €500m transaction. If your balance sheet is €7bn, €8bn or €10bn, that would mean having a very significant proportion of your balance sheet redeeming at a single point of time. It could therefore be preferable from a banking perspective, let alone a regulatory perspective, to issue sub-benchmarks — which in itself may already be a big step. By issuing sub-benchmarks every 12-18 months, you can then build up a nice maturity profile. That’s the strategy most of the savings banks are currently employing. There are only a very limited number, two or three, issuing benchmark-sized transactions — and from what I’ve heard and seen, it will remain that way. So for the time being, the savings bank sector will probably continue to be dominated by the sub-benchmark issuance strategy.

Walter, Sparkasse Dortmund: Sparkassen are indeed bound by their limited balance sheet sizes.

Previously, we only issued private placements with just a few investors — this was, I would say, a manual job: you didn’t really know who may be interested in your covered bonds. We then moved to the sub-benchmarks, where we reached 50-60 investors with our issuance, so this was a really big step for us. For sure, there would be positives if we took the next step and issued a benchmark, and this would be possible for Sparkasse Dortmund, but this would not be very sustainable, because our cover pool is limited for this size. We want to build a curve and to be respected by investors as a frequent issuer. They now know that we will come every 12-18 months and can mark in their calendar that we will be issuing next year — this is our main goal. As well as being an issuer, we are an investor ourselves and we know what we appreciate from other issuers, and we want to be a reliable issuer in that sense.

Day, The CBR: In Berlin, you have been the stalwart of the sub-benchmark market for many years. What are the pros and cons versus benchmark issuance, and is there any prospect of you changing tack?

Schiebler, Berliner Sparkasse (pictured): This is a question we are often asked. First of all, it is well known that, as an issuer, we really love the sub-benchmark segment. Since 2014, we’ve been focused on the sub-benchmark segment, and we have consistently implemented a sub-benchmark strategy over a whole decade. The benefit for us is that we have a well-diversified liability structure. The most important thing for a savings bank is always customer deposits. Our customer deposits provide a very reliable and cost-effective source of funding and reduce our reliance on capital markets. This stability enables us to pursue strategic opportunities within the sub-benchmark segment, while mitigating the risks associated with market volatility. Leveraging customer deposits allows us to maintain a balanced approach to funding, with complementary sub-benchmarks, supporting our sustainable growth. So, if you ask us about benchmarks, we generally would not rule out a benchmark issuance, because we have a €7bn cover pool for mortgage Pfandbriefe. However, this would only be the case if we had a very strong loan business, or if customer deposit growth lost momentum. At the moment, neither of these scenarios is foreseeable. But the cover pool itself would be large enough to support a benchmark issue.

Schaefer, KSK Köln: The Sparkassen Pfandbrief sub-benchmark sector continues to gain recognition, with a number of issuers having effectively opened the door to additional issuers within the space. So I believe the segment has found its place in the capital markets.

As a major savings bank, we hold €6bn of untapped cover pool capacity, which clearly demonstrates our ability to launch a benchmark transaction. But we would then have this sizeable maturity concentration, which would pose a challenge for liquidity management, and particularly in regards to maintaining sufficient liquid overcollateralisation within the cover pool for the segment. So all these considerations have to be carefully weighed up against each other. Nonetheless, we currently feel very comfortable with the sub-benchmark format.

Karstaedt, Sparkasse Bremen: Like the others, we, too, love the sub-benchmark format as it is easy to manage in terms of the maturity structure and liquidity management. Also, like Dortmund, we want to build a curve. Taking the size of our cover pool into account, too, we likely will not issue a benchmark covered bond.

Day, The CBR: What has been your experience with investor marketing so far, in general and with respect to international accounts? Is there a correlation between your efforts and demand?

Karstaedt, Sparkasse Bremen: I imagine it is similar to the activities of our peers, our marketing activities have mostly been targeted at German investors. For example, we hold roadshow and roundtables with our Landesbanken, such as NORD/LB, to present Sparkasse Bremen. That helps us to arouse interest among investors beyond those that we saw in the past when we issued Namenspfandbriefe. And we are currently launching our international marketing efforts.

Walter, Sparkasse Dortmund: We have done some international investor marketing. However, we also profit from the Sparkasse brand, because so many savings banks are doing investor marketing, also with international investors, and they therefore recognise the brand and know it better. They understand that while every savings bank is different, they also have a lot in common, and that their cover pools are mainly residential, and they are solid investments. So while we are doing marketing for ourselves, it is also to the benefit of all savings banks.

We use the different channels: in person, digital, or in print, as with this roundtable. So it’s constant marketing, not just right before a transaction — we try to do our marketing all year-round, whenever investors are interested in information about us. That’s our experience.

Fuchs, Berliner Sparkasse: Our core market is clearly Germany. However, there are other European countries with a strong covered bond investor base that are of interest to us. In 2024, we relaunched our international investor marketing activities. Since then, we have visited Austria, Finland, Belgium and Luxembourg. Like the other savings banks, our aim is to diversify our investor base, and we are delighted to welcome new buy-and-hold investors from the EU, particularly those we have had the opportunity to meet in person. Diversifying our investor base is crucial for mitigating risk associated with relying on a single market, and engaging with a wider range of investors ensures the long-term sustainability and resilience of our financial strategies. It’s difficult to measure the effectiveness of individual marketing activities, whether domestic or international. However, we believe there’s a positive correlation between these activities and investor demand.

Schaefer, KSK Köln (pictured): We recently resumed our international marketing activities, and, of course, our core area is still Germany. After such a long absence from the market, many investors now have free credit lines for us. And a green Pfandbrief in particular proved highly marketable internationally, especially in the Nordics, even without a traditional roadshow. We believe this issuance will serve as a door-opener for us for future transactions. And as said before, the growing recognition of the Sparkassen Pfandbrief products, along with the underlying business model of financing private residential real estate, resonates very well with conservative investors here and abroad.

Anhamm, NORD/LB: The simple fact is that Germany has the largest investor base for covered bonds. So for a German institution to have German investors as its largest investor constituency is the most natural thing in the world. Almost every jurisdiction in the covered bond market has a very strong domestic bias — countries such as Australia, New Zealand and Canada are exceptions. French investors buy more of a French covered bond than a German covered bond. The same goes for the Spanish, the Dutch, the Scandis or whoever. So there is a natural bias, which we can easily live with, and which is a great advantage for our institutions.

At the same time, there is indeed an increase in international marketing. Currently, for a savings bank transaction, between, say, 70% and 80% goes to Germany. This would be an unusually high percentage for some other German issuers. Nevertheless, for savings banks, it reflects increasing distribution to international investors, most prominently to the Nordics, which on average account for something between 10% and 15% of allocations. This means, firstly, that we have been successful as a sector in marketing the concept up there, and secondly, that these investors clearly understand the concept of the Savings Banks Finance Group, as well as the advantages the banks provide, be it from the cover pool perspective or be it with their regional strengths.

Adding to our earlier discussion of benchmarks versus sub-benchmarks, what we understand from investors is that they rather prefer somebody who comes out every 12 to 18 months with a sub-benchmark, than somebody that comes out every three years with a benchmark. So frequency is indeed an important consideration: you need to give credit risk management a reason to look into the lines of individual issuers — should you come every year or so, then it makes sense for me to look at you; if you only come every three years, I may think twice about it.

Additionally, the recognition of the red “S” for savings banks is definitely increasing. It is going international. There is greater awareness of this particular sector, and we are strong believers in that whole strategy being even more successful going forward. We probably won’t reach the stage where, say, less than 50% is placed with Germany. At the same time, every single investor we get outside this country increases diversification, and thereby increases the access of German issuers for not necessarily only Pfandbriefe, but also other products.

Day, The CBR: Some savings banks are working with triple-ratings for their Pfandbriefe, others a double-A rating. What are the explanations for and implications of this? Can we expect all savings banks to switch to a triple-A approach?

Karstaedt, Sparkasse Bremen: Spar-kasse Bremen Pfandbriefe are not triple-A rated, but AA+ by Fitch. At the start of the rating process, we did not have sufficient time to collect all the necessary data to achieve a AAA rating from Fitch. We decided that double-A+ would be enough, and we saw oversubscription of four and five times in our last issues, so indeed the rating was not a problem — nor for the pricing: although we started with guidance wider than triple-A rated Pfandbriefe, we were able to tighten in 7 bp in 2024 and 6bp in 2025.

Nevertheless, we are weighing up the costs and the benefits involved in doing the work necessary to gain a rating based on comprehensive data, and we may get it this year, I hope.

Fuchs, Berliner Sparkasse (pictured): We have a triple-A rating for our Pfandbriefe here in Berlin. We began issuing covered bonds after German reunification, in the early 1990s, and since 2004 our Pfandbriefe have been rated triple-A. This comes in addition to the extensive documentation and strict asset controls, as mentioned earlier.

The triple-A rating is helpful when it comes to pricing — some investors care about a triple-A rating. However, investors also pay attention to the quality and overcollateralization of the cover pool. In our case, this means clearly focusing on our core market of Berlin-Brandenburg, only including performing loans in the cover pool, having a very transparent cover pool without any derivatives, and having overcollateralization of €4bn in our mortgage cover pool.

Schiebler, Berliner Sparkasse: So, while triple-A is indeed important, and a positive factor, but there’s more to it than just the rating.

Schaefer, KSK Köln: We have a Aaa Moody’s rating for our Pfandbriefe and a Aa3 issuer rating. From our perspective, a triple-A rating is essential, especially if you’re issuing in sub-benchmark format, because if you want to reach the LCR classification of 2A, you need a good rating. Moreover, if you want to address a broader investor base alongside this LCR eligibility, a triple-A rating is a prerequisite. Whether a double-A rating is sufficient is ultimately the decision of each savings bank in the context of their own funding strategy. And as a rule, the syndicate will play a key role in determining how good is the placement potential, and if a triple-A or double-A rating is needed.

Walter, Sparkasse Dortmund: We think that the triple-A rating is a quality label in itself. It’s widely known and maybe needs less explanation than a AA+ — some investors are not familiar with why these ratings may differ. On the pricing side, some say it makes a difference — sometimes you maybe see it, sometimes you don’t. I think this may be a question for Christoph. But at Sparkasse Dortmund, we said, OK, we are fairly new to the market, we don’t want to have to explain our rating, but just show investors we have a very good cover pool, with all the added extras cited by Berlin, and this is why we went for the triple-A, and we would do it again if faced with the question.

Anhamm, NORD/LB: If everybody had the choice and it were that easy, everybody would offer triple-A Pfandbriefe. But we have to bear in mind, as was already mentioned, that it requires quite a bit of data, and data management internally that not every institution necessarily has, be that because of its size, the availability of staff, or cost sensitivities. So depending on these and their needs, institutions may or may not go for triple-A. The trend is indeed probably towards triple-A, based on what we have just heard and also what we are hearing across the industry. However, there are good reasons to go for double-A in particular if you opt for a Fitch rating, because it is relatively easy to achieve AA+ due to the underlying rating of the Savings Banks Finance Group, as such. With the same amount of data and work, you could probably also achieve triple-A from Scope, but investors are principally focused on the major three, with Moody’s and Fitch apparently being the ones people currently opt for.

Does this have an impact on pricing? Well, pricing is determined by so many different factors that it’s hard to determine whether a notch difference in rating is a significant driving factor. There is also, for instance, the frequency of issuance, the composition of the cover pool, the size of the issue and its implications for liquidity and LCR recognition, and the different profiles of the issuers in the market — the combination of all those will determine pricing, so it’s very hard to say that an individual component is responsible for 0.5bp-1bp one way or the other — and to my understanding, there is no statistical evidence on the actual impact of any of these individual factors.

We also have to note — with due recognition to the vdp — that the Pfandbrief itself is a brand name, very well known internationally. So simply saying that you are a German Pfandbrief issuer gives you a certain credit among international as well as domestic investors, and puts a ceiling on your spread.

Day, The CBR: Turning to ESG matters, Christian, you’ve already spoken a little about how the EPCs contributed to your green bond initiative. Can you tell us more about KSK Köln’s broader strategy on this front?

Schaefer, KSK Köln: Sustainability has always played an important role across all our business areas. As a result, we’ve been awarded a sustainability rating of prime status with ISS since 2016. Our above-average ESG commitment was also a key factor in the second party opinion for our green bond.

This commitment did not result in a big greenium for us when issuing the green bond, but it led to a broader investor base, which was reflected in the oversubscription of the issuance.

Day, The CBR: Katja, you mentioned that Sparkasse Bremen is planning a Green Pfandbrief. What was the catalyst for this?

Karstaedt, Sparkasse Bremen: We also maintain an ESG rating from ISS with prime status since 2022. We have reflected ESG considerations via our sustainability strategy, and strictly implement and monitor them in our own investments. It’s very important to us — it’s in our DNA. That is our main driver to issue a green bond. The main challenge for us at the moment is the quality of the data, because not only is it important for us to issue a green bond, but the reporting afterwards must be of high quality. So that involves a lot of work. But we are endeavouring to achieve this and hope to be able to issue our green bond in 2026.

Day, The CBR: How is ESG reflected in your activities in Berlin and Dortmund? And what are your thoughts on green, social and sustainable bond issuance?

Schiebler, Berliner Sparkasse: Concerning the overall ESG performance of BSK, I would highly recommend taking a look at our externally-audited sustainability report, which is CSRD-compliant, and available online.

In terms of funding and the market as a whole, we have seen that ESG issuance from banks actually fell last year. There were lots of issuances from sovereigns and sub-sovereigns, but reduced activity from banks. One possible reason for this is that major players have already reached their critical mass in terms of assets, and this is resulting in a stagnation of new credit business. We have also observed that international investors are not paying as much attention to ESG as they did in the previous years.

But although we see international headwind for ESG, our aim is to introduce an ESG product on the funding side, too. This could enhance our reputation as a sustainable and forward-thinking company. If you look at our business model, then you will see that we have a sufficient pool of loans that qualify as green or social. We are working on this, and we are ready to take action in the near future. But there is nothing final that we can announce yet.

Walter, Sparkasse Dortmund: The Sparkassen themselves are bound by their public service mandate, so they can be considered to be quite strong on the social side. In this regard, all the savings banks invest heavily in their region, helping our customers to, for example, get more energy efficient housing and so on — where other banks maybe leave them behind, we support them. That’s one part of our ESG approach.

When it comes to social and green bonds, mainly because we lack the data, and therefore we don’t aim to issue such bonds in the near future. This can change at some time, but there would be this issue of data to tackle first.

Day, The CBR: Christoph, what is your perspective on the dynamics in green, social and sustainable bond issuance from banks? Balanced against the headwinds we have heard mentioned, we have seen positive developments such as the first covered bond in EuGB format recently?

Anhamm, NORD/LB: What we observe is that — and Andrej already alluded to this —  there is, to a certain extent, less of a focus on the particular characteristics of the bond itself. So if somebody issues a green bond or social bond or regular bond, that is still important, but not as important as it used to be, at least for the time being. What there is a greater focus on is the overall sustainability characteristics of the individual issuers. Do issuers follow certain policies? How do they run their business?

In this regard, it is quite important to underline what our colleagues at the savings banks have already said about the sustainability approach of the sector. There is a commitment by the DSGV concerning sustainability and ESG that many savings banks have signed. This includes, for instance: a commitment to trying to achieve the Paris Climate Agreement, as well as the 17 UN SDGs; a commitment to systematically reducing the CO2 emissions in their own operations to zero by 2035; alignment with climate or ESG objectives when it comes to financing, proprietary investments and risk management; as well as promoting climate protection by locally empowering their employees and supporting environmental development. So there are already a lot of ESG commitments across the savings bank sector, with individual institutions on taking their own actions on top of this. This is very important and definitely something we should promote further, to make sure that everybody understands the particular characteristics of the group when it comes to ESG topics — which is not necessarily just looking back on the 200 year history, but also what we aim for going forward, which is the same for the savings banks as well as the Landesbanken, the whole group.

Day, The CBR: Sticking with that forward-looking theme, but exploring other industry trends, firstly, artificial intelligence is hard to ignore in any sector these days. How is AI being integrated into the business policies of savings banks, and is it influencing your business strategies?

Schaefer, KSK Köln: Just a couple of weeks ago, in mid-March, Skipi, the Sparkassen KI Pilot, was introduced here at KSK Köln. Although it currently has some areas for growth, it is expected to soon enhance its ability to support searches across our internal sources, guidelines, intranet, and more. The focus is on supporting employees, not replacing them. At present, this doesn’t entail any change in the business model. If anything, one could consider that the objective of this support is to generate additional time for client-facing activities, particularly with the emphasis on preparing client meetings. Skipi’s capabilities are being continuously expanded. KSK Köln also offers its employees and managers a wide range of training opportunities, to ensure that Skipi can be optimally integrated into daily workflows and to provide the best possible support.

Walter, Sparkasse Dortmund: AI poses challenges, but it enables us to offer our customers simple tools to use, where a bank teller or other employee is not essential, and so creates additional time for the important questions of our customers. So it won’t change how we as savings banks work — we won’t be a digital bank, or digital-only bank. Of course, customers expect to be able to use some services online. But if you want to buy your home and you need advice, many people want to talk to a person who guides them and supports them. So AI is helping us to free up time for the really important parts of our work. I would also note that there are regulatory aspects attached.

Karstaedt, Sparkasse Bremen: It’s a similar story at Sparkasse Bremen. We use Copilot for many things. Our chief digital officer, Pranjal Kothari, is on our executive board, and he is responsible for strategic developments in the areas of digitalization, automation and AI. The most question for us is how we can use technological innovations to make processes more efficient for increased customer value. The customer is the most important person for us, and so we use AI to make the experience better for them.

Fuchs, Berliner Sparkasse: I would echo much of what has already been said. Artificial intelligence enables faster decision-making for us, and higher customer satisfaction. We also use the S-KI Pilot, which is frequently used in customer services. Interview preparation time has been reduced, giving colleagues more time to spend with customers. While this new technology promotes productivity, it does not change our business model as a savings bank.

Day, The CBR: It’s been noted how deposits are at the heart of savings banks’ models. Does demographic change and the increasing proportion of digital natives pose a risk to the customer base of savings banks? At home in the UK, my 21 year-old son has a Revolut account — although my mum has switched from a high street bank to a building society that isn’t closing its branches.

Schiebler, Berliner Sparkasse: It’s interesting to hear that your son has a Revolut account. My 19 year-old son has a savings bank account, and beside the award-winning savings bank app, he really likes savings banks’ ATMs and branches where he can speak to someone in person if he has any problems.

First of all, demographic change is a very important topic, and we have a kind of advantage here because our core business area is Berlin. It is the largest and most populous city in Germany, and we have experienced above-average GDP growth since 2005. Berlin is also an area that is growing. It is a vibrant city that attracts young people and innovative start-ups. We have excellent universities, which is one of the reasons why Berlin is a popular destination for young people. This is also reflected in its demographics: the average age in Berlin is 43 compared to 45 for Germany as a whole. That’s a solid foundation to build our business on.

Looking to the future, we believe that the future of banking is hybrid. We provide banking solutions for digital natives, and we support new digitalisation initiatives within the Savings Bank Financial Group. However, we also have 100 branches across the city for customers who prefer in-person service. We believe that being close to our customers is in savings banks’ DNA.

Karstaedt, Sparkasse Bremen: We pursue a dual strategy: on the one side, the digital natives, on the other side, customers who value a physical branch and support in financial services. Both of them are our customers in every way. Whatever our costumers’ preference, they can use both opinions at any time — visiting a branch or using the app, because the Sparkasse app is very easy to use. So for us, it’s exactly the same as Berlin — and I imagine Köln and Dortmund would share this stance.

Schaefer, KSK Köln: Indeed. Like many banks, we’ve observed a shift of younger people towards neo-banks. However, in our case, this remains limited. We still have a market share of around about 40% of customers below the age of 30. We positioned ourselves for digitally serving the younger generations, supported by the award-winning Sparkassen app that has been mentioned, and a wide range of straightforward digital access channels, enabling us to address those digital natives. It’s perhaps worth mentioning that the savings banks are in the near future starting a Sparkassen neo-broker, with very low transaction costs. We have also established a so-called “Team Finance”, where younger advisors engage with young customers on an equal footing. At least for the short term, such an approach mitigates the risk of ceding this business segment to other institutions.

Walter, Sparkasse Dortmund: It’s a question of infrastructure. We have the Sparkassen app, which for many years has been deemed the best banking app, so we serve digital natives with this. And straightforward services can be very well dealt with by apps and so on. But for major decisions that you take perhaps once in your life, you want to talk to a person — you need to trust somebody with your decisions, with their guidance — and this is something we can offer as a savings bank, that digital banks cannot offer. We, too, want to open a branch for the young, similar to what Köln is doing, where our young customers can talk to advisors who are about the same age as them, because sometimes savings banks have a bad image, with an old advisor who isn’t on the same wavelength and doesn’t know the needs of these younger customers. We want to mitigate this risk. So it’s a dual strategy, because we would want to want to keep both your mum and your son as customers.

Anhamm, NORD/LB: When it comes to this question of digital or neo-bank versus traditional banks, savings banks are one of the very few institutions who actually cover both, so the presence on the ground as well as being accessible online and via apps. And that approach is actually the best evidence of a really consistent ESG strategy, because it addresses the social aspect: everybody, irrespective of how accessible to you new technology is, can access their bank account. As I mentioned at the beginning, savings banks have 6,700 branches and 4,000 self-service points, which means roughly one point of contact for every 7,800 people in this country. And those services are accessible to people even if they don’t necessarily have the greatest understanding of technology.

And looking at anecdotal evidence, one of my elder kids is currently thinking about buying a house, and guess what? When it came to the financing, the first thing they said is that they have an appointment at the savings bank around the corner next week. They have only been with online banks their entire lifetime, and all of a sudden, when it comes to that point, they go to the local savings bank — and I think that’s the final opportunity for the bank to catch them and get them on board, and to get the deposits as well. So there is something behind this whole story that you can’t escape. The savings bank sector can serve customers when it comes to something a bit more sophisticated than having an online account with a bit of brokerage attached. That’s a very long term sustainable and thought-through approach.

As ever, our aim is to recognise the deals and institutions that represent the best of the covered bond market. That may mean standing out in a crowded field, ploughing a lone but worthy furrow, planting the seed of future growth – or something that impresses in a way we haven’t thought of yet.

Indeed, rather than having strictly pre-defined categories, we will let the year’s outstanding deals and institutions drive which awards are given. At the same time, we will seek to both recognise the best in the busiest parts of the market, while not neglecting outstanding achievements in more niche or novel areas.

So we largely leave it to you to decide how to choose and pitch your candidates, but the following examples of the types of awards that have been previously handed out may provide some useful pointers:

• Best euro issuer, best global issuer, most impressive issuer

• Best global house, best syndicate, best advisory

• Deal of the year, best euro issue, best debut

• ESG, innovation, comeback

• Comeback issue, breakout deal, pioneer

The full roll of honour from last year’s awards (including those pictured) can be found here:

https://news.coveredbondreport.com/2025/06/the-cbr-2025-awards-for-excellence-our-winners/

One category that may feature this year but that we have not recently recognised with an award may also illustrate how we will seek to reflect market trends: US dollar covered bond issuance. We also reserve an Editor’s Award that may be used to recognise market initiatives or contributions by an individual or institution over a longer period of time than the past year.

Ultimately, we expect to pick 10-12 winners.

The deadline for nominations is 20 May, but please endeavour to let us have your thoughts as early as possible. This can be in the form of a call or email, screed or presentation, however long or short.

The awards cover the period 16 May 2025 to 15 May 2026 – so dust off those 2025 notes! And remember, you can nominate deals and institutions that are deserving of recognition but may not be your own.

We are particularly keen to receive early input relating to institutions further afield to help ensure that any such winners can make it to Frankfurt to collect their awards in person.

The winners will be decided by The Covered Bond Report following our deliberations but also on the back of input solicited from a cross-section of market participants.

We plan to announce the winners in Frankfurt on 25 June in conjunction with our annual conference co-hosted with the International Capital Markets Association (ICMA) and Association of German Pfandbrief Banks (vdp), and organised by the vdpPfandbriefAkademie. You can find out information about the event here:

https://www.icmagroup.org/events/the-2026-covered-bond-investor-conference/

We hope to see you there and may the best deals and institutions win!

Photo credit: Wonge Bergmann

The EMF-ECBC initiative comes in the wake of the December launch of a European affordable housing plan by the European Commission, which was itself the culmination of a year of work, with the EMF-ECBC having earlier, in May 2025, published a concept note that its new strategy expands on.

Central to the industry body’s proposals is a 28th regime mortgage guarantee scheme, which would build on the experience of successful public-private national guarantee schemes in countries including France, Greece, Italy, the Netherlands and Romania. As a so-called 28th regime measure, it would complement rather than replace or subsume the national activities, and operate as a scaled-up pan-EU scheme.

“This strategic pathway sets out a vision for strengthening the competitiveness of the EU Single Market by advancing toward a more harmonised European mortgage framework,” said Luca Bertalot, EMF-ECBC secretary general (pictured), announcing the proposals on 27 March.

“At its core is the proposal for a European ‘28th regime’ mortgage guarantee – an initiative designed to improve access to homeownership, enhance financial stability and mobilise private capital, all while respecting the fiscal constraints faced by many Member States.”

As well as directly making mortgages more accessible and housing more affordable for citizens, such a guarantee scheme could promote energy efficiency measures, Bertalot told The CBR, with the Energy Efficient Mortgage Label the EMF-ECBC has promoted potentially being required for eligibility, for example.

The industry body said a scheme could be implemented through a dedicated fund established by the European Investment Bank (EIB) within the framework of the European Housing Platform, and provide a first demand guarantee on a portion of mortgage loans.

“For specific categories of borrowers, such as young people, low-income households, single parents or elderly borrowers, the level of the guarantee could be increased subject to clearly defined criteria and conditions applicable at EU level,” said the EMF-ECBC. “The guarantee would cover the bank’s credit risk and not the borrower’s repayment obligations.

“As a result, banks participating in the scheme would be able to lend with lower risk exposure, and reduce both capital requirements and execution risk.

Further measures in the EMF-ECBC’s package include interventions in the European implementation of Basel III, notably:

Making the transitional arrangements in Article 465(5) of the Capital Requirements Regulation (CRR) permanent at the current level of the Output Floor for residential mortgage exposures that meet the low-risk criteria;

Reassessing the necessity of introducing the Basel III prudent value (CRR property value) in Article 229 CRR as a new concept of value in the calculation of capital requirements, instead of the long-standing and well-established concepts of market value and mortgage lending value. The property value has not been adopted in other jurisdictions such as the UK and Switzerland, thereby exposing EU lenders to an uneven playing field in their lending business. [EMF-ECBC wording.]

The EMF-ECBC also said that a more harmonised European mortgage framework would improve the efficiency of capital markets funding, benefiting instruments such as covered bonds, securitisations and sustainable debt.

Bertalot said that such a European mortgage guarantee scheme and associated harmonisation and labelling could serve as an approach that could then be built on at a global level – an initiative it is working on with the International Secondary Mortgage Market Association (ISMMA).

Although several EU banks have issued EuGBs since the Netherlands’ ABN Amro became the first financial institution to do so in February 2025, none had yet issued an EuGB in covered bond format. Some have noted the greater differential in execution – in terms of greenium, for example – achievable in unsecured green bonds, while the availability of appropriate assets and potential additional reporting requirements have been cited by others as a reason they have not issued EuGB covered bonds.

Nordea Mortgage Bank, the group’s Finnish covered bond issuer, previously sold three euro benchmark covered bonds under the Green Bond Principles (GBP) managed by ICMA, most recently a €750m three year in March 2025, while the group’s other Nordic covered bond issuers have similarly tapped local currency markets.

Keil, head of covered bonds at Nordea, said the banking group wanted to demonstrate its leadership in sustainable finance through the issuance of the first EuGB covered bond.

“We see ourselves as the leading sustainable issuer in the Nordics and want to remain at the forefront of developments,” he said. “This first ever EU Green Covered Bond and first EuGB from a financial institution in the Nordic region is a testament to that role and that ambition.

“Being an early adopter of EU regulation also shows our support for EU efforts to transition to the low carbon economy,” he added. “We haven’t yet seen where EuGBs will end up, but we are willing to push forward and lead the way in this area, to help strengthen their credibility and minimise the potential for green-washing.”

The additional requirements of EuGB regulation have contributed to only gradual take-up of the format by financial institutions so far, and Keil testified to the work the format involves.

“With a big team effort across the organisation,” he said, “we have spent a lot of time internally in establishing a truly robust internal set-up on processes to screen and select Taxonomy-aligned assets, and also meet the requirements on impact and allocation reporting as well as attain validation by our external reviewer. In EuGBs, we have stronger supervisory oversight compared to a traditional ICMA bond, and it is reflected in a robust internal governance.”

Nordea published the associated (six page) factsheet, which is required for EuGBs, on Monday, alongside a pre-issuance review from ISS confirming alignment with EuGB regulation and the EU Taxonomy. The factsheet notes that the EuGB also meet the GBP.

The proceeds from the bond will be used to refinance a Finnish portfolio of Taxonomy-aligned retail mortgages that support energy efficient housing. The portfolio is broadly similar to that eligible for the bank’s previous green bonds, even if EuGB requirements are stricter.

Nordea’s deal hit the market after the first two days of the week passed without any financial institutions supply in euros on the back of the latest bout of volatility, particularly evident on Monday. Improved sentiment on Tuesday nevertheless encouraged issuance in other asset classes and currencies, and on Wednesday, alongside Nordea, Australia’s Westpac sold a €1bn short five year covered bond, with further FIG supply in senior and even AT1 formats. The two covered bonds were the first new euro benchmarks in the asset class since Tuesday of last week (17 March).

“Our ambition has over the last years been to come with a green covered from each of our four mortgage companies each year as part of our sustainable issuance ambitions,” said Keil (pictured). “With that in mind, we decided to proceed with this after seeing the relatively constructive tone yesterday.

“The three year tenor meant that the offering was already on the defensive side, and it’s also a good spot on the curve currently,” he added, “but then the green format, and furthermore the EuGB format, makes it stand out more in a market like this.”

Leads Crédit Agricole, Deutsche, DZ, Nordea and SG opened books with initial guidance of the mid-swaps plus 16bp area for a euro benchmark-sized April 2029 issue, expected rating Aaa. After around two-and-a-quarter hours, they reported books above €1.25bn, including €100m of joint lead manager interest, and an hour later, the spread was set at 11bp for a €1bn size on the back of books above €1.4bn. The final book was above €1.37bn, including €100m of JLM interest, with around 50 accounts participating.

“We saw a positive opening of the market, but you never know these days, so we went into this aware of the volatility and headline risk,” said Keil. “But from the get-go we saw that the book was building well, and we were able to land at a very good level.”

The spread of 11bp over mid-swaps is the tightest on a euro benchmark covered bond since October 2023, when Germany’s LBBW sold a €500m three-and-a-half year public sector Pfandbrief at the same level.

“That goes to show how the resilience of the euro covered bond market amid volatile markets,” said Keil, “but also how this is reinforced by the addition of a green or EuGB label to an issuance.”

Around three-quarters of the deal was allocated to investors with strong sustainability commitments or ESG-dedicated funds, according to the issuer and leads’ classification, which Keil said was overwhelming.

“We were absolutely happy with the level of interest and the fact that we saw so many dedicated ESG investors,” said Keil. “That share is much larger than on our previous green bond issuances in traditional ICMA format, suggesting that this EuGB format can reach a broader range of investors.”

Banks and private banks took 55%, asset managers 24%, central banks and official institutions 10%, insurance companies and pension funds 7%, and corporates 4%. Germany, Austria and Switzerland were allocated 54%, the Benelux 23%, France 12%, the Nordics 6%, Italy 3%, and the UK and Ireland 2%.

The leads put the new issue premium at 2bp and claimed a greenium of 1bp, although Keil acknowledged that this was hard to assess in current markets.

“Again, we see less greenium in covered formats than in senior and subordinated, so this was in line with what we expected, rather than any sudden improvement on this EuGB,” he added. “And maximising greenium is not the underlying motivation for using the EuGB format.”

Having debuted in the format, Nordea expects to stick with it, even if GBP green bonds are expected to co-exist with EuGBs for the foreseeable future.

“We have done this because we believe in the format,” said Keil, “and we believe there is a future here. Our intention is not to do it once and then go back to issuing in ICMA format.

“It will depend on how the market evolves and how issuance is received, but based on yesterday’s deal, there is clearly an interest among investors, so, all else being equal, we will probably pursue the path of EuGBs going forward.”

As well as covered bond issuance in local currencies from its other issuers in Denmark, Norway and Sweden, Keil said Nordea could also consider unsecured EuGBs.

On 23 February, LBBW launched the tender for up to €750m of a mix of mortgage and public Pfandbriefe in maturities ranging from November 2026 to July 2029 totalling €4.65bn. Caps for individual lines were set to ensure retention of ECB/LCR and index eligibility.

The German bank also went out with a €500m no-grow eight year public Pfandbrief in its first benchmark since May 2025, when it issued a €500m 10 year public Pfandbrief.

LBBW first engaged in a liability management exercise two years ago, for its Additional Tier 1 (AT1) issuance, and turned to it again when looking at its funding programme for this year and liability structure, according to head of funding Martin Rohland.

“On the AT1, we had a different target, which was to keep investors in the credit and derisk the new issue,” he told The CBR, “but at the end of the day, it was helpful in opening up a new tool for us to use.

“When we looked at our liquidity position coming into this year, our numbers are a bit smaller than last year, when – including Berlin Hyp – we were quite active, so we thought, how can we pro-actively manage this?”

The bank therefore targeted the six short-dated benchmarks, while issuing a new longer dated transaction.

“It’s an optimisation of the bank’s liquidity stack and its structural liquidity position,” said Andreas Wein, head of funding and debt investor relations at LBBW. “We felt that we could make use of the current market environment to do this and also return after having been absent since May last year.”

The new €500m no-grow February 2026 issue, rated Aaa, was priced at mid-swaps plus 22bp on the back of a book of some €1.18bn (including €175m of joint lead manager interest), following guidance of the 27bp area.

Forty-eight accounts were allocated, 55% going to banks, 22% to central banks and official institutions, 18% to asset managers and fund managers, 4% to insurance companies and pension funds, and 1% to other investors. Germany, Austria and Switzerland took 57%, the Benelux 18%, the Nordics 8%, southern Europe 7%, the UK and Ireland 5%, and other 5%.

While the market was not experiencing the heady order books of the start of the year – when LBBW might historically have been expected to hit the market – the bank was able to tap into attractive levels with its new issue.

“We started the year with a very comfortable liquidity position,” said Wein, “hence, we had no need to be first out of the blocks. We kept monitoring the market and saw that spreads were only going in one direction, and at the end of the day managed to issue at pretty much the lowest day of the year so far – although you could say that was as much down to luck as skill.”

The market subsequently softened as Israel and the US attacked Iran, with estimates last week suggesting LBBW might have had to pay 4bp more for such a new issue in the wider market, which saw no new euro benchmark covered bond issuance. The new issue was nevertheless stable at or slightly inside re-offer, according to Rohland.

The tender offer closed last Tuesday and, with €1.049bn of bonds (23%) tendered by investors, LBBW decided to buy back as much as €1bn, 95% of the tendered amount and 22% of the outstandings.

“We included a wide range of short dated paper – some of it above par, some below – to give the biggest audience the chance to participate,” said Rohland, “and we were quite pleased that it was not all skewed in one direction or the other.

“Some of the investors who tendered took the premia so they could buy some new, longer dated paper, while others used the money for different purposes.”

He noted that the Iran war did not have any noticeable impact on the conduct of the liability management exercise.

“It was definitely a greater success than we would have hoped for or expected,” added Wein, “so we are extremely pleased. It also shows a good mutual engagement with the large professional investors who were active in both legs of the transaction, which can only be conducive to business with them going forward.”

The Norwegian covered bond was only the second euro benchmark covered bond in green, social or sustainable format to have been issued this year, after a €500m seven year inaugural Green Pfandbrief for Hamburger Sparkasse on 3 February. It is also only the second green covered bond from SR-Boligkreditt – the covered bond issuer of SpareBank 1 Sør-Norge – after a €500m seven year debut in 2019.

“It’s a long time since we’ve done a green covered – indeed, this is only our second overall,” Hjelle told The CBR. “And as we have assets under the green bond framework that we can utilise, we decided to add the green mark to it and show the covered bond investor community that we also direct our green assets there, and not only for senior preferred and non-preferred.”

The use of proceeds of SR-Boligkreditt green covered bonds – issued under a common framework with SpareBank 1 Sør-Norge green bond issuance – is green buildings, while other categories in the group framework include renewable energy and clean transportation.

With parts of Germany enjoying the Karneval holiday on the Tuesday, SR-Boligkreditt lined up launch for last Wednesday (18 February), and ultimately hit a relatively clear market, with only one other issuer – Italy’s Banco BPM – in the market that day, two others having opted to move on the holiday.

On Wednesday morning, leads DZ, Erste, ING, LBBW and Natixis opened books with guidance of the mid-swaps plus 30bp area for a benchmark-sized February 2033 issue, expected rating Aaa. After around an hour and a quarter, they reported books above €2bn, including €275m of joint lead manager interest, and after around two-and-a-half hours, the spread was set at 22bp on the back of more than €2.5bn of orders. The size was then set at €1bn (NOK11bn) on the back of a final order book above €2.09bn, including €250m of JLM interest, with more than 85 orders good at re-offer.

According to Hjelle (pictured), the order book is the biggest of any SR-Boligkreditt covered bond, marginally higher than its previous high.

“We are very happy with the way the book turned out,” he said, “and it was interesting to see how granular it was, with not much fast money.”

According to a lead manager, 67% of investors allocated have a green mandate, with 22% classified as dark green.

Banks and private banks took 62%, asset managers and funds 20%, central banks and official institutions 15%, and insurance companies and pension funds 3%. Germany, Austria and Switzerland were allocated 58%, the Benelux 13%, the UK and Ireland 13%, France 7%, the Nordics 5%, and other 4%.

Hjelle suggested several factors played into the deal’s success.

“There hasn’t been much green supply in covered,” he said. “And then there’s good demand for the SR-Boligkreditt name, because we haven’t been that active, and that’s also the case for the Nordics in general.

“We also understood that at this time the seven year maturity was sought after. And having the day almost to ourselves was positive.”

The level of demand enabled SR-Boligkreditt to achieve the €1bn it was targeting. The issuer guides investors that €750m is its typical size, with €1bn or €500m possible depending on how strong or not the market may prove. Its last euro benchmark, a five year in June 2025, was €750m, with a €500m eight year having preceded that in February 2024.

The leads put fair value at 22bp, implying a new issue premium of zero. Hjelle noted that this was based on the issuer’s conventional curve, and suggested that the ultimate pricing at 22bp was attributable to the green nature of the new issue, while an unlabelled bond would have come at 23bp.

“I was hoping for 22bp,” he added, “but expecting 23bp.”

With the issuer having guided the market for approximately €2bn of covered bond issuance this year, it could return in 2026, said Hjelle.

SpareBank 1 Sør-Norge is meanwhile looking forward to welcoming the covered bond community to its home town of Stavanger for the latest annual spring European Covered Bond Council meeting, in early May.

“We are looking forward to this and proud to be hosting events in our auditorium,” said Hjelle.

Since Arion sold the first euro-denominated Icelandic covered bond in September 2021, a €300m five year deal, its covered bond rating has improved from A- at S&P to Aa1 at Moody’s.

Arion’s covered bonds had in November 2023 been upgraded by S&P, for a second time, to A+, alongside those of its compatriots, on the back of a sovereign upgrade, before the covered bond rating was withdrawn in March 2024. This followed a consent solicitation exercise launched in February 2024 to remove the S&P rating as well as related clauses from its documentation, leaving the covered bonds rated by Moody’s, which had assigned them a rating subsequent to the euro debut.

The move was the consequence of a broader review of credit ratings by Arion, which decided that rather than the two ratings for the bank it had, one rating would suffice, taking into account considerations such as Nordic banks with similar size and operations only having a single rating. Out of Moody’s and S&P, it dropped the latter for all its ratings, with the bank saying that Moody’s was more appropriate given Arion’s bancassurance business strategy. The bank had recently been upgraded from BBB to BBB+, with stable outlook, by S&P, while its Moody’s rating was A3, with stable outlook, the same as currently.

Arion’s new issue comes ahead of the maturity in October of its debut, which was tapped for €200m in 2022 to take it to €500m.

According to Jónsson at Arion Bank, the issuer stepped up its covered bond investor relations work in the second half of 2024 before moving up a gear last year as the maturity approached. The bank then targeted a new euro issue in the first quarter in its funding plan.

“That played out very well,” he told The CBR.

After announcing its Q4 2025 results on 11 February, the bank on Monday of last week (16 February) announced the mandate for a €300m (ISK43bn) no-grow five year covered bond.

The bank also announced an any and all tender offer for its outstanding euro covered bond issue.

“One reason for the buyback was to support the new issue by giving existing investors the opportunity to rotate out of the old issue into the new one,” said Jónsson (pictured). “Secondly, there were internal considerations, including reducing our outstanding wholesale funding and managing our short term maturity profile.”

Leads Barclays, DZ, Erste and UBS opened books for the new issue last Tuesday morning (17 February) with guidance of the mid-swaps plus 47bp area for the April 2031 sub-benchmark. After around an hour and 20 minutes, they reported books above €900m, including €185m of joint lead manager interest, and after around two-and-three-quarter hours, they set the spread at 40bp on the back of books above €1.1bn, pre-reconciliation. The final book was some €1.1bn, with 46 accounts good at re-offer.

“We are very pleased with the transaction,” said Jónsson. “We struck a nice balance between good pricing and the quality of the order book.

“I believe there is clear evidence from our recent transaction that the higher rating supported the new issue,” he added. “We saw a more granular and diversified order book. Our current rating is closer to what investors are used to in the covered bond space, namely Aaa.”

The lack of recent Icelandic covered bond issuance – the last having been a €300m five year deal for Landsbankinn in March 2023 – necessitated a degree of price discovery, he noted. The leads therefore circulated a mix of recent references in the five year part of the curve, including Finnish sub-benchmarks for Ålandsbanken and Hypo, non-Eurozone benchmarks from Bendigo Bank and SMBC, as well as a Aa2-rated benchmark from Italy’s Banco BPM.

“And then,” added Jónsson, “there was of course some dialogue with potential investors about how they would view the transaction.”

The €1.1bn book is the biggest of any Icelandic euro covered bond.

“We were pleasantly surprised by the demand,” said Jónsson. “The order book grew quite quickly and we ended up around 3.5 times oversubscribed, which was far above what we had expected.”

Asset managers took 37%, banks 31%, central banks and official institutions 19%, hedge funds 10%, and insurance companies and pension funds 3%. Germany, Austria and Switzerland were allocated 36%, the Nordics 32%, the UK 11%, the Benelux 9%, Italy 8%, France 2%, and CEE 2%.

Ahead of the new issue, Arion had internal discussions as to whether to go for a benchmark, €500m size, or continue with sub-benchmark issuance, ultimately deciding on the latter course so that it will have the capacity to return sooner.

“We are quite keen to become a more frequent issuer in the euro covered bond market,” said Jónsson. “It’s been five years since we did our last issue and three years since the last Icelandic covered bond in the euro market. And it’s clearly beneficial to be a bit more frequent – we saw that, for example, from this exercise and the price discovery that we had to do as a result of being infrequent.

“So while we can’t promise that we will issue every year or every other year, we strive to become a more frequent issuer – it won’t be five years before the next one. And if we start to see more frequent covered bond issuance from the Icelandic issuers, that will help everyone here in Iceland.”

Landsbankinn’s issue is due in March 2028, while the third previous Icelandic covered bond, a €300m five year for Íslandsbanki issued in September 2022, matures in September 2027.