SpareBank 1 Eu1bn sevens ‘textbook’ in busy euro covered mart

Norway’s SpareBank 1 Boligkreditt sold a Eu1bn seven year covered bond on Wednesday that was described as “textbook” into a busy euro covered bond market where eight issues totalling Eu6bn were launched this week.

Leads Commerzbank, Crédit Agricole, LBBW and Natixis launched the seven year issue with guidance of the 25bp over mid-swaps area. The spread was then set at 23bp, on the back of over Eu1.25bn of orders, before the size was set at Eu1bn (Nkr9.43bn).

“This was a rather textbook trade,” said a syndicate official at one of the leads.

Also in the market on Wednesday was Belgian issuer Belfius, selling a Eu500m six year Pandbrieven that was three times oversubscribed, and Singapore’s UOB, selling a Eu500m five year debut.

“The books are not as large as the Belgian’s, but this is a non-Eurozone product for an issuer that has been more frequent recently and was focussed on the price, so it is a good outcome,” said the lead syndicate official.

Syndicate officials at and away from the leads said the deal offered a new issue premium of around 5bp, seeing SpareBank 1 February 2021s at 11bp, mid, and September 2022s at 17bp.

“That premium to mid levels is in line with recent supply,” said the lead syndicate official.

A syndicate official away from the leads said demand for the deal may have been slightly limited by the frequency with which SpareBank 1 has returned to the market in recent months. The Norwegian bank sold a Eu1bn September 2022 issue in August and a Eu1.5bn 2018 issue in November, after having been absent from the euro benchmark market November 2013.

“They have taken a fair bit out of the market recently,” he said. “But they still took the Eu1bn size, which they like, so it seems a solid result.”

Syndicate officials said the bulk of this week’s euro covered bond issuance had gone well, and that more successful supply is likely next week.

They added that issuers currently mulling deals will likely look to tap the market early next week, ahead of a European Central Bank meeting after which president Mario Drago is expected to announce additional quantitative easing and/or a cut to the ECB’s deposit rate.

“I don’t see why people would wait until after the ECB, because you never know what’s going to happen,” said one. “If there’s a good window and you can do your deal, I think you’re better to get it done.”