Covered Bonds Pfandbrief market in autumn 2025: Seasonal pattern persists despite declining issuance activity

Historically, the second half of the year is the less active in terms of issuance activity, with the exception of 2021, which was marked by the COVID-19-pandemic. Thus, after the summer break, Pfandbriefe in the EUR benchmark segment totalling EUR 7.3bn have been placed, while Pfandbriefe with a volume of EUR 23.3bn were issued in the first half of the year. Accordingly, the traditional distribution of issuance activity between the two halves of the year should remain unchanged this year. The Pfandbrief volume issued since the summer break is spread across a total of eleven issues from ten issuers. The issuers’ focus was on Pfandbriefe with medium maturities. Only the deal from Bausparkasse Schwäbisch Hall in October had a ten-year maturity, while the majority of issues focused on maturities between four and eight years. However, the Pfandbrief market is not alone in this regard when compared internationally. We have observed a sustained preference among issuers for the medium-term maturity bucket in recent years and do not expect this trend to reverse in the near future. Evidently, some issuers are reluctant to make the necessary spread concessions required to successfully place long-term bonds. The investor base is currently somewhat divided: On the one hand, there are investors who focus on the absolute return of bonds and find Pfandbriefe with long maturities attractive. On the other hand, there are investors who consider the term spread between the medium and long-term maturity segments to be too narrow. We do not currently expect these opposing views to resolve in the short term.

In view of issuance activity in the second half of the year, the relatively high proportion of Public Pfandbriefe placed during this period seems rather atypical. While their share, at just over 24%, is only slightly higher than the previous year, the share of Public Pfandbriefe in total issuance in the second half of the year currently exceeds 40%. Nevertheless, issuance of Public Pfandbriefe in EUR benchmark size reached a new record high of EUR 7.5bn this year, even before the end of the year. Furthermore, the successful debut transaction by Hamburger Sparkasse (Haspa) impressively demonstrates that Public Pfandbrief issuance continues to be viewed as attractive. In our view, the high overcollateralization ratios in the cover pools of  Public Pfandbriefe offer potential for further market growth, even if this is likely to be rather limited due to the currently lower funding requirements of German issuers.

In total, the Pfandbrief volume placed up to 24 October, at EUR 30.5bn, already exceeds the entire previous year’s issuance volume of EUR 28.5bn in the EUR benchmark segment, but remains significantly below the years 2022 and 2023, with issuances of over EUR 35bn. Traditionally, November and December are among the months with the lowest issuance volume of the year. Accordingly, we expect at most a few isolated market appearances by Pfandbrief issuers in the EUR benchmark segment until the end of this year. According to our forecast, the issuance volume could still rise slightly to around EUR 32bn. Given the maturities of just under EUR 30bn next year, we would expect – assuming that all maturities are reinvested – an issuance volume from German Pfandbrief issuers at least similar to that in 2025. Against this backdrop, we expect a very active start to 2026 for German Pfandbrief banks.