Berlin Hyp’s €500m Green Bond heralds return of Pfandbrief market

German property lender Berlin Hyp placed its first green Pfandbrief bond of the year, and marks the third issue of a mortgage Pfandbrief in the last few weeks, in a strong sign that the Pfandbrief market is springing back to life. 

DZ Hyp and Unicredit had effectively re-opened the market with their own benchmark bond issues the week before Berlin Hyp, after a hiatus of nearly four months in which no mortgage Pfandbrief had been publicly placed.

The eight-year Berlin Hyp bond with a volume of €500m and a coupon of 0.01% was heavily oversubscribed, with the order book reaching a volume of over €1.2 bn from 55 investors, Berlin Hyp said. Bankhaus Lampe was co-lead manager, and syndicate banks were ABN Amro, Comerzbank, Credit Agricole, DZ Bank and LBBW.

More than half of the bond (54%) was placed abroad, with investors from Scandinavia and UK accounting for 40% of the total. Benelux investors made up a further 6%. Banks absorbed 45% of the placing, with funds taking up 29%. A further 25% went to central banks and public institutions. 

Berlin Hyp uses the bonds to refinance its lending to green buildings. Its practice is to lend in parallel to the bond the same amount again for the duration of the bond in green buildings, determined by a pre-set series of conditions relating to energy efficiency and a host of other sustainability criteria.

This was Berlin Hyp’s fifth Green Pfandbrief, and only the ninth Green Bond altogether. With a total of €4.5bn in Green Bonds in issue since the debut issue five years ago, Berlin Hyp remains the most active issuer of the eco-friendly bonds among Europe’s commercial banks. 

Gero Bergmann, board member at Berlin Hyp responsible for capital markets, said: ‘After the corona crisis has also had a significant impact on the financial markets in recent months, we are particularly happy about the successful issue of our fifth Green Pfandbrief today. The strong demand from international and SRI investors demonstrates the high standing that Berlin Hyp holds even in uncertain times and that the issue of climate change is meanwhile firmly anchored as an overall topic in the financial market.’