Germany

There is a golden opportunity for banks to set a precedent by issuing sustainability-linked bonds across the capital stack, rather than waiting for regulators to finish fretting over the guidance.

Muenchener Hypothekenbank (MuHyp) issued its second ultra-long dated Pfandbrief of the year on Tuesday, flat to the curve and into good demand at the tightest spread for this tenor and longer in the past 18 years.

German open-source software company Suse has announced its intention to float on the Frankfurt Stock Exchange, joining the lengthy queue of European companies seeking to go public.

Bayerische Landesbank (BayernLB) was set to price the tightest covered bond of the year on Monday and the tightest Pfandbrief since late 2018, boding well for two follow-on transactions from Muenchener Hypothekenbank and Natixis Pfandbriefbank.

Europe’s turbulent IPO market has taken its toll on the listing of Synlab, the German laboratory technology company, with the sellers deciding to shrink the size of the transaction after investors refused to budge from the bottom of the price range.

Jumbo, a privately owned supermarket chain with stores in Belgium and the Netherlands, has closed a debut Schuldschein at €200m, according to market sources. New deals are proving popular, as low levels of deal flow cannot slake investors' thirst for assets.

The European Banking Authority has warned issuers against rushing into the sustainability-linked bond market, as it works on deciding whether the structures conflict with eligibility criteria for capital and other loss-absorbing instruments. Despite the warning, market participants are pushing hard to make sure banks are able to issue SLBs in any format, writes Tyler Davies.

Aareal Bank and Deutsche Pfandbriefbank (PBB) issued highly successful Sonia linked Pfandbriefe this week, doubling the supply seen so far this year.

Aareal Bank managed to attract healthy demand for its first Sonia covered bond, enabling it to price the deal in line with fair value, in a large size, with negligible price sensitivity and a high quality order book.

DIC Asset, the German commercial real estate company, has sold €250m worth of Schuldscheine. The debt’s margin is tied to the sustainability of the borrower’s property portfolio.

Aareal Bank mandated leads on Wednesday for a four year sterling Pfandbrief. The announcement came a day after Deutsche Pfandbriefbank (PBB) issued the tightest ever Sonia trade.

With the amended legal framework for German Pfrandbriefe set to become law within weeks, observers are upbeat, noting that although extended lockdowns are unhelpful for the commercial real estate (CRE) securing many programmes, the bonds still offer considerable investor protection.