Danske sells $1bn senior, Sparebanken Sør euro covered debut due

Mar 11th, 2016

Danske Bank sold a twice-subscribed $1bn five year senior unsecured bond on Monday, with a lead noting it priced close to a recent issue from Swedbank, which is more established in the US market. Sparebanken Sør is expected next week with an inaugural euro benchmark covered bond.

Danske EntranceAPPDanske’s new issue is only its second benchmark dollar deal since 2011, after the Danish bank ended a long break from the dollar market by selling a $1bn five year in September 2015.

Leads BAML, Citi, Danske, Goldman Sachs and JP Morgan launched the new five year 144A issue at 8:30 EST on Monday morning with initial price thoughts of the low 150s over Treasuries, before setting guidance at the 145bp area plus or minus 5bp just before noon.

The deal was then re-offered at 140bp and the size fixed at $1bn (Dkr6.76bn, Eu907m) with the book closing at $2.1bn from over 100 accounts.

“This went well,” said a syndicate official at one of the leads. “Obviously printing a $1bn deal with a book of over $2bn is exactly the situation you want to be in as a lead.”

The deal followed a $1.25bn five year senior unsecured issue for Swedbank that was priced at 135bp over Treasuries on Thursday of last week (3 March).

“We had the pricing of that deal in mind when launching Danske’s new issue,” said a syndicate official at one of the leads. “We started from the same area, and although they got a slightly tighter print there are different pricing dynamics in the dollar market – Swedbank are a more frequent issuer and have a slightly better rating – so this is a good level.

“We could see from the Swedbank deal that this level of the 150s was one that appealed to investors.”

Accounts from the US and Canada were allocated 66.5% of Danske’s deal, the UK 14.8%, Asia 7%, the Nordics 6%, Switzerland 2.7%, and others 3%. Asset managers took 67.7%, insurance companies and pension funds 12.2%, hedge funds 7.2%, central banks and official institutions 6%, banks and private banks 4.4%, corporates 2%, and others 0.5%.

The lead syndicate official said the spread of the new issue was equivalent to a wider spread than Danske would have been able to achieve with an equivalent euro deal.

Norway’s Sparebanken Sør Boligkreditt this (Friday) morning announced a mandate for a debut Eu500m no-grow five year euro covered bond, which is expected to be launched in the early to middle part of next week, subject to the establishment of credit lines, according to syndicate officials at the leads.

The announcement comes after the Norwegian issuer held a European roadshow, which concluded yesterday (Thursday). Danske, LBBW, Nordea and UniCredit have the mandate.

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