Hypo Noe Pfandbrief paves way to 10s

By Bill Thornhill
12 May 2020

Investors were "hugely receptive" to Hypo Noe’s seven year Pfandbrief issued on Tuesday, suggesting it is only a matter of time before another borrower tests demand further along the curve with a 10 year covered bond — which would be the first since early March, before the coronavirus pandemic disrupted markets. Reopening such long dated funding would provide a compelling alternative to using central bank liquidity.

After mandating BNP Paribas, Commerzbank, Erste Group, LBBW and NordLB on Monday, order books were opened on Tuesday for a €500m no-grow seven year mortgage backed Pfandbrief rated Aa1 from Hypo Noe, with initial guidance of 25bp area over mid-swaps.

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