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Berlin Hyp issues €1B pfandbrief bond with record negative yield

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Berlin Hyp issues €1B pfandbrief bond with record negative yield

German bank Berlin Hyp AG sold €1 billion of pfandbrief bonds with what it said is the lowest issuance yield in the covered bond market on record.

Pfandbrief bonds, or covered bonds, are cheap, low-risk funding instruments backed by real estate and public debt.

Berlin Hyp received 38 orders worth €1.15 billion for the three-year bond, which has a yield of minus 0.588% and a coupon of 0.01%. The bank said it was able to make the sale its first jumbo offering in six years, following strong demand for the bonds.

Gero Bergmann, a member of Berlin Hyp's management board, said that "despite the obvious negative yield, the bond offered investors added value due to the low supply of short maturities and relative value aspects."