The primary market for euro benchmark covered bonds was very active during the first half of 2026, with EUR 122bn of new supply. This volume was the second largest in the past decade and the third largest since 2004, confirming that H1 2026 was particularly strong by historical standards.
German Pfandbriefe remained at the forefront of euro benchmark covered bond issuance in H1 2026. German issuers placed EUR 22.4bn across 28 transactions, making Germany the largest issuing country with an 18.4% share of total H1 issuance. Germany thereby overtook France as the largest issuer for the first time since 2019.
The large volume of supply was easily absorbed by the market, reflecting favourable issuance conditions. New issue premiums were negative on average, while bid-to-cover ratios remained solid. Conditions even improved for German issuers, as evidenced by declining average new issue premiums and stable demand, with an average bid-to-cover ratio of 2.8x. At the same time, issuers extended maturities: the average tenor of newly issued Pfandbriefe rose to 6.9 years in H1 2026, from 6.3 years in both 2024 and 2025.
These favourable conditions appear to have encouraged banks to frontload covered bond issuance in H1, which seems especially related to the fact that new issue conditions remained surprisingly favourable, despite geopolitical uncertainty and the escalation of conflict in the Middle East. Historically, around 66% of annual issuance has been completed in the first half of the year, but in 2026 this share is likely to reach around 70%.
German issuers were the most active participants in the euro benchmark covered bond market during H1. Issuance was only slightly below the EUR 23.3bn printed in H1 2025, but still close to the strong average pace (i.e. more than EUR 20bn of supply) seen since 2022. Activity was broad-based, with 15 German issuers accessing the market. Commerzbank was the largest contributor with EUR 4.25bn, followed by DZ HYP and HVB. Meanwhile, seven issuers also placed sub-benchmark Pfandbriefe of EUR 250mn.
Issuance was heavily concentrated at the start of the year. In January alone, German issuers printed EUR 11.25bn, accounting for roughly half of total German H1 issuance and almost 40% of overall market supply that month. Following a quieter February and no German benchmark issuance in March, activity resumed in Q2, with German issuers placing EUR 8.9bn between April and June (on average 16% of the overall market). At the start of H2, the market has already welcomed its first transaction, Deutsche Kreditbank’s 12-year Pfandbrief.
Net supply was firmly positive in H1 (underlining the frontloading), as EUR 88bn of euro benchmark covered bond matured. This resulted in EUR 34bn of positive net supply. Germany contributed meaningfully to this outcome, posting EUR 6bn of positive net supply.
Issuance to slow down in H2. Germany continues to lead
We expect EUR 45bn of euro benchmark covered bond issuance in the second half of 2026, of which around EUR 10bn will come from Germany. With EUR 13bn of Pfandbrief redemptions scheduled in H2, net supply in Germany is expected to turn negative. For the broader market, we forecast negative net supply of around EUR 22bn, providing a supportive technical backdrop for covered bond spreads.