Berlin Hyp sold a higher share of a Eu500m long six year green Pfandbrief to foreign accounts than on any of its previous benchmark covered bonds, according to head of investor relations and sales Bodo Winkler, while adding accounts new to the credit and achieving tight pricing.
The Eu500m October 2023 mortgage Pfandbrief, launched off Berlin Hyp’s combined green senior and covered bond programme, was priced yesterday (Wednesday) at 14bp through mid-swaps by leads Commerzbank, Crédit Agricole, JP Morgan, LBBW and UniCredit on the back of Eu870m of demand boosted by a 45% allocation to dedicated investors.
“Once again, the significant oversubscription and the high percentage of socially responsible investors in the order book are testament to the fact that we have our finger on the pulse when it comes to our green bond programme,” said Gero Bergmann, member of the Berlin Hyp board of management responsible for capital markets.
“We draw on our green bonds to refinance loans for energy efficient and sustainable buildings. This business is particularly important to us, which is why we decided this spring to anchor the financing of green buildings as a strategic target. The aim is for green building financing to make up 20% of our loan portfolio by 2020.”
Berlin Hyp sold the first and to date only other green covered bond benchmark in April 2015, followed this up with its first green senior deal last September, and expects to issue more green bonds after yesterday’s transaction.
“We are very happy with the outcome,” said Berlin Hyp’s Winkler (pictured speaking) after yesterday’s new issue. “What was most striking for me was the very high share of foreign investors – we have never had such a high share on any covered bond, so that was something new and really encouraging for us.
Foreign accounts took 47% of the deal – including 18% to the Benelux and 13% to the UK and Ireland – while domestic accounts took 53%. Banks were allocated 31% and savings banks 26%, with central banks and other official institutions allocated 43%. Some 45% went to socially responsible investors.
“We had quite a low share of banks in the order book, which is a bit different to other German Pfandbriefe,” said Winkler. “Clearly it has not gone so much to LCR-driven accounts.
“There was a lot of real green interest,” he added, “investors with dedicated green funds. And some of those we saw on the roadshow, which was nice.”
Eight investors new to the Berlin Hyp credit participated, to add to the 50 the bank has already reached since embarking upon its green issuance.
The deal was priced at 14bp through mid-swaps following guidance of the 12bp through area, with the new issue premium put at around 1bp and the re-offer the equal-tightest of any benchmark covered bond this year.
“We are pleased we had to pay only a minimal concession,” said Winkler, “but I can’t say if the pricing would have been any different for a standard Pfandbrief on the same day.”
