Eika preps euro return after strong 2013 in Norwegian kroner

Norway’s Eika Boligkreditt, formerly Terra BoligKreditt, will go on a roadshow next week ahead of a potential euro deal, which would be its first benchmark covered bond in the currency since January 2013 after a strong year in the domestic market led it to delay such a move, according to an official at the issuer.

Eika on Monday announced that it has mandated Deutsche Bank, LBBW, Natixis and Nordea to arrange a roadshow starting on Wednesday of next week, after it which it may tap the euro benchmark covered bond market.

Eika, which used to be called Terra BoligKreditt until it rebranded last year, last issued a euro benchmark covered bond in January 2013, a Eu1bn 2.125% 10 year. Any forthcoming euro deal would be its first under the new name.

Kristian Fiskerstrand, vice president, funding, Eika Boligkreditt, told The Covered Bond Report that the issuer felt it was time to consider a return to the euro market to service its investor base there and that going on a roadshow was a natural step given its lengthy absence from the market.

“We haven’t been in the euro market since January 2013, but it is natural for us to have a presence there and we felt it was about time to get back,” he said.

Strong demand in the domestic market led the issuer to postpone a euro benchmark, he added.

Eika sold Nkr10.51bn (Eu1.26bn) worth of covered bonds in 2013, its largest annual volume of covered bond issuance in Norwegian kroner since 2011, according to its fourth quarter report.

“It is very positive that the company experienced greater depth of access and better liquidity in Norway’s bond market during 2013 than the year before,” said the issuer.

Eika’s Nkr10.51bn of Norwegian kroner covered bond issuance last year compares with Nkr5.713bn in 2012, Nkr11.83bn in 2011 and Nkr4.3bn in 2010.

Fiskerstrand noted that Nordic issuance (in Norwegian kroner and Swedish kronor) represented 60% of Eika’s total covered bond supply in 2013.

“A liquid Norwegian krone market is of course of importance to us with regards to matters such as viability in regulatory liquidity buffers,” he said.

He added that he expected housing market developments in the Nordic region, especially in Norway, to come under discussion in meetings with investors during the roadshow.

He said there had been a change in sentiment over the past 12 months, with a long term trend of price increases seeming to stabilise for “a soft landing.”