Strong demand for Berlin Hyp €500m bond

Kicking off the unsecured benchmark bond market this year was German lender Berlin Hyp which placed a €500m five-year senior facility.

Due to the strong demand, the volume was increased to €750 mln, the bank said. The bond was issued with an initial spread at mid-swap + high 50s, and the order book opened in the mid-swap +55 region. The bank received orders for as much as €2.1bn at this level, Berlin Hyp said. The order book was closed by the underwriting banks after less than an hour and the price was set at mid-swap +53 basis points. The bond’s coupon rate is 1.625%.

The order book included about 200 individual orders, the majority of which came from Germany (80%). More than half of the bond went to savings banks, which are traditionally the main buyers for Berlin Hyp's bonds. The share of subscriptions by foreign investors was dominated by orders from Scandinavia. The unsecured bond was placed on the market by a consortium consisting of Commerzbank, DekaBank, DZ Bank, HSBC and Landesbank Baden-Württemberg.

Parent company Landesbank Berlin has been going through major restructuring, and said it was important to issue the new bond to an even broader investment base. Board member Gero Bergmann said “The high participation rate of savings banks shows that Berlin Hyp has an excellent reputation as an issuer in its own sector. At the same time, we were also able to place a significant portion of the bond with other German and international investors…. Particularly in light of the restructuring measures in the Landesbank Berlin Group and Berlin Hyp’s progression to a savings banks’ partner for commercial real estate financing, we are convinced that the path we have taken is the correct one.”