Berlin Hyp issues first Jumbo Pfandbrief in six years

German lender Berlin Hyp has issued its first Jumbo Pfandbrief in six years, in the shape of a three-year €1 bn bond with a coupon of 0.01%. 

Rated Aaa by Moody's and with a yield of -0.588%, Berlin Hyp said that the bond showed the lowest issuance yield of all time in the covered bond market.

'Over the summer break, the interest rate environment in the euro zone again decreased significantly, with the result that the major part of the swap curve is now trading in negative territory. Despite the obvious negative yield, the bond offered investors added value due to the low supply of short maturities and relative value aspects,' said Gero Bergmann, member of the board of management of Berlin Hyp responsible for capital markets business.

On Wednesday morning syndicate banks BayernLB, Commerzbank, Credit Agricole CIB, JP Morgan and UniCredit opened the order book, generating orders of over €1 bn in a short space of time, which allowed the syndicate to set the price at mid-swap -2 basis points. After the bond volume was fixed at €1 bn, the order book was subsequently closed with a total of 38 orders worth €1.15 bn.

As with the last issuance July 2019, an eight year Green Pfandbrief, more than half of the bond was placed abroad (59%). Investors from Scandinavia (40%) in particular showed significant interest, while Swiss and French investors accounted for around 6%.

Despite the negative yield, funds ordered 13% of the bond. However, the lion's share went to banks (61%) and central banks/official institutions (26%), Berlin Hyp said. Savings banks and affiliated companies subscribed around 8% of the issue.

'We are delighted to see that the Pfandbrief in its 250th year of existence, despite such an unusual environment, has been able to prove its quality as a reliable refinancing instrument,' concluded Bergmann.


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