German lender Berlin Hyp said on Tuesday that it has issued its first covered bond with a negative yield of minus 0.162%.
German lender Berlin Hyp said on Tuesday that it has issued its first covered bond with a negative yield of minus 0.162%.
The three-year bond has a volume of €500 mln and a coupon of 0%.
Berlin Hyp said the bank syndicate including Crédit Agricole, Deka Bank, JP Morgan, LBBW and UniCredit opened their order books on Tuesday morning with an initial spread guidance of mid-swap plus four basis points. In just over an hour the order volume reached almost €1.5 bn from 39 different investors, and the order book was closed shortly thereafter with the bond priced at mid-swap plus one basis point.
A large proportion of the Pfandbrief, amounting to 72%, went to German investors, followed by investors from the UK (9%) and Scandinavia (6%). Banks were the largest investor group, accounting for 53%.
'We are very pleased to have successfully issued this Pfandbrief, the first one with a negative yield,' commented Gero Bergmann, management board member responsible for Berlin Hyp's capital market business. 'For months now we have been observing one maturity after the other going into negative yield territory. On account of this trend, it was only a matter of time before the first benchmark issue with negative yield took place on the covered bond market.'
He added: 'As refinancing with matching maturities is highly important to covered bond issuers, we hope now that there will be a return to more short-term issues on the market.'