Nykredit ventures longer for syndicated SEK5bn threes

Jun 4th, 2016

Nykredit sold its first benchmark, syndicated Swedish krona covered bond with a three year maturity on Tuesday, having previously issued shorter dated paper in the Swedish market, and attracted some SEK20bn of orders for a SEK5bn FRN.

Nykredit imageNykredit Realkredit has since 2012 regularly issued in the Swedish krona market, usually twice per year, to refinance its Swedish krona lending with syndicated benchmark trades. However, it has typically issued one year paper in such exercises, with longer-dated Swedish krona issuance limited to private placements.

Earlier in May, the Danish issuer announced a mandate for the SEK5bn (€538m, DKK4bn) three year FRN, which it said would complete the refinancing of its Swedish krona-denominated lending in its Capital Centre H.

“This deal is the first time they have ventured out the curve for a benchmark, syndicated transaction, and considering that it went extremely well,” said a syndicate official at one of the leads.

On Tuesday morning, leads Danske, Nordea, Nykredit and SEB launched the deal – which pays a three month Stibor plus 75bp coupon floored at zero – with guidance of the Stibor plus 60bp-65bp area, before revising guidance to the 55bp-60bp area, will price within range, on the back of books approaching Skr20bn. The spread was then fixed at 55bp with the book in excess of Skr20bn.

Syndicate officials said the deal offered a 20bp-25bp premium versus the bid side of the curves of tier one Swedish issuers.

“That is in line with expectations,” said the lead syndicate official. “In earlier exercises, Nykredit in the best of times maybe paid 15bp, but after the repricing in the Swedish market over the past year, foreigners now have to pay a bit more on top.

“To price SEK5bn in a new maturity with only a 20bp-25bp pick-up is a good result.”

The syndicate official added that a good mix of domestic and non-domestic accounts were in the order book.

“There were some foreign investors looking in at this who really appreciated the pick-up versus other triple-A Swedish krona bonds,” he said.

Nykredit’s last public deal in the Swedish market was a Skr13bn one year issue in August.

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