‘Awesome’ demand for Skr10.3bn syndicated Nykredit issue

Sep 5th, 2013

Nykredit Realkredit drew Skr50bn of orders when it sold Skr10.3bn (Eu1.18bn, Dkr8.81bn) of one year SDOs backed by Swedish mortgages in its third such sale last Thursday (August 29). Meanwhile DLR Kredit rounded off the latest Danish auction season today (Thursday).

Nykredit imageNykredit Realkredit a year ago began syndicating its Swedish krona issuance in a move designed to bring its sales closer to the model used by Sweden’s domestic issuers. In September 2012 it sold Skr5bn and then held a further sale in February this year.

After announcing the new issue of one year covered bonds on Tuesday of last week, leads Danske, Nordea and Nykredit Markets launched the transaction last Thursday morning with initial price guidance of mid-swaps plus the low to mid-20s. Some Skr25bn of orders were placed within 10 minutes of the books being opened, and guidance was tightened to 20bp-22bp over. It was revised further, to 18bp-20bp, when demand had grown to Skr50bn within half an hour, before the pricing was fixed at 18bp over on the back of a total order book of Skr56bn.

“The awesome demand for the consecutive Nykredit Realkredit one year Swedish krona refinancing transactions is a clear sign of the issuer having achieved broad acceptance for this short term product with the domestic Swedish investor community,” said Morten Bækmand Nielsen, head of investor relations at Nykredit Realkredit.

He noted that the pricing achieved had also come in since the last sale relative to Swedish paper, with the February sale having been priced at 33bp over mid-swaps. He said that comparable Stadshypotek paper, for example, was trading at around 5bp through mid-swaps and had been at a similar level in March.

“The spread trend versus our Swedish peers has been impressive,” said Bækmand.

Some 30 accounts participated in the transaction, with 35% going to treasuries, 23% to investment funds, and insurance companies and asset managers taking roughly 18% each. Swedish and Danish investors took 53% and 35%, respectively, with 12% taken by other countries.

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