Issuer | Berlin Hyp |
Credit rating | Aaa |
Format | Four year euro benchmark mortgage Pfandbrief and November 2032 green euro benchmark mortgage Pfandbrief |
Lead managers | ABN Amro, Barclays, BayernLB, Commerzbank, Crédit Agricole, DekaBank, DZ Bank, Erste, HSBC, JP Morgan, LBBW, Natixis, Nordea, UBS, UniCredit |
Expected pricing | Tuesday, January 28 |
One final print
Berlin Hyp is preparing to print its final covered bond ahead of its integration with parent LBBW later this year. The German lender has picked 15 banks to arrange the forthcoming dual tranche sale, which is expected to be priced on Tuesday.
“It’s a farewell trade,” said one syndicate banker close to the mandate. “That’s why the list of banks is so big — they’ve mandated their top line of relationship banks.”
“They’ve been quite an active issuer and worked with a lot of banks in the past, so this final dual tranche is a goodbye and thank you to all the banks,” added a second banker at one of the leads.
Berlin Hyp became a subsidiary of LBBW in July 2022. Later this year, the Landesbank is set to merge Berlin Hyp with its own commercial real estate financing business. During this merger, Berlin Hyp’s outstanding debt will be transferred to LBBW, which will then issue all future debt on behalf of Berlin Hyp.
However, “if you look into it, it will continue to exist,” said the first banker. “The collateral pools will be merged so there will only be one cover pool going forward. It’s just the name that will disappear — the pool and bonds will continue to exist.”
The dual tranche structure was chosen to cover Berlin Hyp’s funding needs until the integration, said the second banker.
Ultimately, “I think this will be an interesting trade,” he added. “We haven’t done a dual tranche Pfandbrief for a long time.”
The last dual tranche Pfandbrief was issued by Berlin Hyp’s parent, LBBW, in April 2024, according to GlobalCapital’s Primary Market Monitor. The Landesbank issued a €500m 3% April 2027 note at mid-swaps plus 16bp alongside a €750m 3% September 2031 bond at 30bp over.
Well proven points
Aside from the label of Berlin Hyp’s final public outing, the upcoming deal is very much akin to recent supply. “It’s just a mortgage Pfandbrief like those we’ve already done this year,” said the first banker. “We’ve seen a lot of great trades, some good ones, and then some where investor or issuer expectations weren’t 100% filled.”
These are two “well proven tenors”, said the second banker. “We’ve seen a few shorter dated deals around four and five years as well as a long seven year. The market is very receptive to these tenors.”
NordLB’s €1bn 2.625% October 2028 green print, for instance, was spotted at an I-spread of 26bp on Monday, having tightened 7bp since it was issued on January 9. Meanwhile, Commerzbank’s €1.25bn 2.75% December 2029 print was trading at 32bp, 4bp inside reoffer.
Longer dated paper from Bausparkasse Schwaebisch Hall — a €500m 2.875% January 2031 note, issued at 40bp on January 15 — was spotted at 34bp. Finally, last week’s longer dated Pfandbrief supply — DZ Hyp’s €1bn 2.75% February 2032 and Helaba’s €1bn 2.75% January 2031 — was trading in like with reoffer.
The leads will also look at the secondary curves of Berlin Hyp and its parent LBBW. The second banker said, “there shouldn’t be much difference between the two.” As the pair are merging, they should trade at the same level, he added.
LBBW’s €500m 2.375% October 2028 note was spotted at 23bp, its €1bn 2.625% February 2030 at 30bp and its €750m 3% September 2031 at 35bp.
Meanwhile, Berlin Hyp’s €750m 3.375% July 2028 conventional note was quoted at 24bp. Its €500m 3.375% August 2028 social bond was trading at 226bp, its €750m 2.875% April 2030 green note at 35bp, its €500m 2.625% August 2031 social bond at 38bp and its €750m 3% January 2033 green note at 42bp.
“Berlin Hyp didn’t issue much last year so they don’t really have a lot of fresh data points on their curve,” said the second banker. “But LBBW have issued quite a few that can act as helpful reference points.”
Of the quoted comparable bonds from Berlin Hyp, only the €500m 2.625% August 2031 social bond was issued in 2024, with the others priced in 2023.