Nordea Finland restarts covered, Sparebanken Vest sets euro roadshow

Aug 22nd, 2013

Nordea Bank Finland reopened the euro benchmark covered bond market with the first such trade since the end of July on Tuesday, issuing a Eu1.5bn five year transaction, while Sparebanken Vest has announced a euro roadshow mandate.

Nordea Bank Finland300Nordea’s deal came a day after Svenska Handelsbanken had on Monday reopened European FIG supply after the summer break and amid other Nordic bank activity (see separate article).

Leads Barclays, Deutsche Bank, Nordea and RBS priced Nordea Bank Finland’s Eu1.5bn deal at 7bp over mid-swaps, after initial price thoughts of the 10bp over area and then guidance of the 8bp over area.

At 7bp over, the deal incorporated a “minimal” new issue premium of 2bp versus fair value, said a lead syndicate banker, who noted that the level of oversubscription and the high quality order book allowed the issuer to size a Eu1.5bn deal.

Some Eu3bn of demand was registered for the transaction, which the lead syndicate official said made for the largest book for a covered bond that has priced inside 8bp since 2008. At Eu3bn, the book was also one of the largest for any euro benchmark covered bond this year.

Syndicate officials away from the leads said the deal went well, unsurprisingly so, and generally found the pricing appropriate.

“This is an outstanding result in terms of absolute spread level, and evidence that the convergence across core jurisdictions is going on,” said Vincent Hoarau, head of financial institutions and covered bond syndicate at Crédit Agricole CIB.

“Nordic covered bonds are not far away from the best German Pfandbriefe,” he added. “We will end the year with negative net supply of Eu60bn or so in benchmark covered bonds and I don’ t see how the trend can be stopped. The core covered bond market is marching towards normalisation.”

A lead syndicate official said the transaction was very pleasing.

“It was a really good deal,” he said, “The issuer could have done Eu1bn flat to the curve, but it wanted size, and Eu1.5bn at 7bp is outstanding.”

Norway’s Sparebanken Vest Boligkreditt is planning to return to the euro benchmark covered bond market for the first time since January 2012 and will go on a roadshow next week ahead of the move.

Danske Bank, HSBC, LBBW and Natixis have the roadshow mandate, which hit the screens on Monday.

Egil Mokleiv, managing director, Sparebanken Vest Boligkreditt, told The Covered Bond Report that the issuer has not tapped the public euro markets for a long time. The company was established in 2008 and, being focused on raising long term funding, has had no major redemptions to refinance so far.

“We haven’t issued a public covered bond for around 18 months and are planning a public deal this fall,” he said, “so we thought it made sense to update investors and get feedback on their views on Norwegian covered bonds in general and Sparebanken Vest Boligkreditt’s in particular.”

Sparebanken Vest Boligkreditt intends to issue more frequently, added Mokleiv, since next year is the first year that the issuer has to carry out refinancing of some size.

“We have been growing based on purchases of mortgages from the parent bank and most of our funding is long term,” he said.

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