German Pfandbrief issuers dominate primary market activity at the start of the year
Karsten Rühlmann
Landesbank Baden-Württemberg
02.2026
With a new issue volume of EUR 28.75 billion, the EUR benchmark covered bond market was solid in January, despite ongoing geopolitical tensions.
With EUR 11 billion, German Pfandbrief issuers made a decisive contribution to primary market activity. At the same time, it was the strongest January in a 10-year comparison and was therefore even stronger than the above-average post-corona years of 2023 and 2024. Market participants were offered a broad selection of issuers and maturities. Overall, the positive investor sentiment from the previous year continued, although greater sensitivity to spread compression and relative value levels was observed in February.
A total of 11 issuers with 13 placements came to the market in the EUR benchmark segment in January. Commerzbank and HeLaBa presented a dual tranche – each consisting of a Mortgage Pfandbrief and a Public Sector Pfandbrief. The comparatively long terms were striking at the start of the year. Accordingly, slightly more than a third of the issues had a term of 10 years or more. Bausparkasse Schwäbisch Hall (HyPfe) and Deutsche Kreditbank (DKB) (ÖPfe) stood out with terms of 12 years and 15 years respectively. DKB was already represented in the course of last year with a 15-year Mortgage Pfandbrief and a 20-year Public Sector Pfandbrief in the long maturity segment. At 8.1 years, the average term of Pfandbrief issues was significantly longer than in the previous year (January 2025: 5.4 years on average). Issuers took advantage of the normalization of the yield curve during 2025. In addition, we believe that the ECB’s cycle of interest rate cuts has come to an end, leading to greater interest rate certainty for investors. The average issue yield was 3% and ranged between 2.636% and 3.538%.
Overall, the positive investor sentiment from the previous year continued. An average book-to-cover ratio of 3.2x and an average narrowing of 7.4 basis points between initial price guidance and final issue spread indicate high demand. In most cases, there were no new issue premiums compared to the secondary market curve in January.
In the first half of February, three additional Pfandbrief issuers — Münchener Hyp, Hamburger Sparkasse, and ING-DiBa — came to the market. The 7.7‑year Green Mortgage Pfandbrief issued by Hamburger Sparkasse also marked the first ESG covered bond of the year. Compared with previous years, the issuance of sustainable covered bonds has thus far been characterized by a noticeable degree of restraint.
From an overall market perspective, we believe that demand will gradually normalize in February, particularly in view of declining book-to-cover ratios. Investors are showing greater spread sensitivity. The spread compression between the individual jurisdictions continued at the beginning of the year. Overall, the iBoxx EUR Covered Index fell by a further 4 basis points. The benchmark index for German Pfandbriefe narrowed by -2 basis points compared to the end of 2025. Compared to Bunds, the relative value ratio of Pfandbriefe fell further to around 29 basis points. Despite the comparatively low level, we believe that Pfandbrief investors continue to appreciate the safe haven character and lower volatility of covered bonds in the persistently tense geopolitical environment. For 2026 as a whole, we continue to expect a EUR benchmark covered bond volume from Germany of EUR 34 billion.
