Germany’s €58.7bn Bayerische Versorgungskammer (BVK) has set up a debt vehicle for an unnamed “large city” in the province of North Rhine-Westphalia.

The new eight-figure debt instrument, a “Schuldscheindarlehen”, has a maturity of 10 years, the BVK told IPE.

The Versorgungswerk declined to comment on the size of the deal or the share of these instruments in the portfolio.

The BVK confirmed it had done “several” similar deals in recent years across Germany, “mainly with large municipalities”, given the size of its own portfolio.

In a statement, the BVK said financing via an institutional investor offered municipalities the chance to transfer debt from vehicles with short maturity to those with a longer maturity, thus diversifying the traditionally short-term debt via banks.

For Versorgungswerke, these instruments also offer the possibility of diversifying fixed income portfolios, it said.

The transaction was led by SEB AG, which not only operates as an asset manager in Germany but is also one of the main sources of municipal debt financing.

In the summer of 2014, it was confirmed that the city of Offenbach in the province of Hessen had received €140m through a debt vehicle issued by an unnamed Southern German Versorgungswerk, and that the deal had been brokered by the consultancy Kandler Gruppe.

Offenbach’s mayor had noted that it had not been possible for the city to receive financing with a 10-year maturity via any bank.