DZ Bank

A pair of German sub-sovereigns had the primary public sector bond market to themselves this week, with each taking €500m at tight levels to their secondary curves.

The State of Lower Saxony was the sole borrower active in the primary public sector bond market on Thursday as it raised €500m with a 10 year at a negative yield. The deal ended up comfortably subscribed in spite of a slow start to the book-build.

The State of Lower Saxony mandated banks on Wednesday to run a 10 year euro benchmark on Thursday, as German states remain the only action in the public sector primary market.

The State of Brandenburg got over the line with a fully subscribed order book and a yield inside its curve on Tuesday, successfully avoiding the fate that its compatriot Berlin met at the tenor last week.

The State of Brandenburg will keep the primary euro public sector bond market ticking on Tuesday after mandating banks for a new 20 year bond for which it hopes to achieve a better outcome than Berlin's deal at the tenor last week.

Erste Abwicklungsanstalt (EAA) is considering a return to the euro market in the fourth quarter to complete its funding programme.

Niedersachsen Invest GmbH, the financing vehicle 100% guaranteed by the State of Lower Saxony with a policy mission for the recapitalisation and long-term restructuring of NordLB, received a strong reception from investors for its debut bond on Monday.

NRW.Bank’s inaugural social bond sparked a flurry of 15 year trades this week as a flattening French curve and the positive yields on offer helped spur on demand, with three issuers opting to follow the German agency’s successful trip to the maturity on Wednesday.

Syndicate bankers are scrambling to make sense of the covered bond market, where sentiment has been changeable in recent weeks. Amid volatility and small issuance windows, sustainable bonds have proven a safe strategy to ensure successful deals.

The 15 year tenor is the flavour of the week in the SSA market. Three issuers have mandated for deals at the tenor so far, following on from NRW.Bank’s successful trip to the maturity on Tuesday.

Berlin Hyp left ‘a little bit on the table’ with its new green covered bond on Tuesday. The trade was followed by deal announcements from Kookmin Bank and Sparebank Vest Boligkreditt, both looking to issue in sustainable format.

NN Bank unveiled plans on Monday to issue its first covered bond from its newly published soft-bullet programme. At the same time, Berlin Hyp has mandated lead managers for the sale of a new green covered bond.