Opportunistic £300m trade offers SEB diversification

Sep 26th, 2013

SEB made an opportunistic foray into the sterling market on Tuesday to launch a £300m (Skr3.08bn, Eu356m) seven year senior unsecured deal that is the longest dated Swedish sterling issue this year.

The December 2020 deal was priced at 110bp over Gilts via HSBC and RBC, and came two weeks after Skandinaviska Enskilda Banken (SEB) sold a Eu750m five-and-a-half year senior unsecured bond.

By that time the issuer had already hit its 2013 target for fundraising in the senior unsecured format, with the euro transaction having been an opportunistic move. The same applies to this week’s sterling deal, according to John Arne Wang, head of treasury management at SEB.

“It’s pre-funding for 2014,” he said. “But it is also important to point out that we continue the approach we have had over the last few years of systematically reducing liquidity risk across our balance sheet.

“As SEB has not been in the term sterling market since 2009, it has been an ambition to do so at an opportune time.”

The issuer had observed good investor interest in the sterling market in general for some time, but also specifically in relation to a potential deal from SEB, he added, and this prompted the issuer to go ahead with a deal.

“I had the sense that the market would work quite well at the moment due to the large redemptions and available cashflows in the market,” said Wang, “and we wanted to take advantage of this to sell a somewhat longer dated transaction than what we have looked at more recently.”

The deal is the longest dated sterling transaction for a Swedish issuer this year, he noted.

At 110bp over Gilts, the issuer was able to fund itself at a cost roughly comparable to that achievable in euros, he said.

“We also achieved a very high degree of funding diversification versus other senior funding for SEB,” he added. “The order book very much shows that.”

UK investors were allocated 84%, followed by Asia (Korea and Japan) 9%, Switzerland 3%, Germany 2%, and others 2%. Fund managers took 67%, insurance companies and pension funds 15%, banks 9%, central banks 7%, and others 2%.

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