Europe’s first covered bond in 2019 with a negative spread
Deutsche Hypo has successfully increased a benchmark mortgage Pfandbrief issued in June 2018 by EUR 250 million. The Pfandbrief with a coupon of 0.5% now has a volume of EUR 750 million. The residual term stands at approximately seven years. The issue price of 101.935% corresponds to a yield of 0.226% (minus 1 basis point to mid-swap). As a result, the increase is Europe’s first covered-bond issue in 2019 with a negative spread.
The order book was oversubscribed fourfold and contains 45 orders, mainly from European institutional investors. At just under 50%, the largest share of investors is based in Germany, followed by Denmark and Norway. The issue was accompanied by a bank consortium including NORD/LB, Crédit Agricole, Commerzbank, Helaba and UniCredit.
“The increase underscores Deutsche Hypo’s excellent standing on the capital market. The significant oversubscription to the issue suggests a high level of demand for our securities and reflects the tremendous trust our investors place in us – something we see as a sign of appreciation and as a source of motivation. Having issued the first covered bond of the year with a negative spread is a huge success,” says Sabine Barthauer, Member of the Board of Managing Directors at Deutsche Hypo.
Benchmark issue key figures
Issuer: Deutsche Hypothekenbank
Maturity: June 2026
Volume: € 750 million
Spread: Mid-swap minus 1 bp
Coupon: 0.5 %
Rating: Aa1 (Moody’s)
Stock Exchange: Hanover