Pohjola opens euro senior for Nordics at limited NIP

Jan 15th, 2016

Pohjola Bank executed the first Nordic senior unsecured euro benchmark of 2016 on Wednesday, a €500m long five year deal that the Finnish issuer’s head of group funding said was sold with a relatively limited new issue premium.

OP-Pohjola_HQ_January_31_2009-300Benchmark euro senior unsecured issuance only restarted for the year on Friday of last week (8 January) as BNP Paribas sold the first such issue, after financial markets began the year on a weak footing. Supply gathered pace this week and Pohjola took the opportunity to enter the market on Wednesday, going straight out with its new issue without having preannounced the mandate.

Lauri Iloniemi, head of group funding at OP-Pohjola, noted that the issuer had a €500m deal maturing on Tuesday and said the issuer was keen to enter the market early this year. And although most of the large Nordic issuers were already in blackout periods this week, Pohjola was still able to issue ahead of results on 4 February, he added.

“So basically if I wanted to do something before my blackout, this was the week to do it,” said Iloniemi, “knowing that at least from a Nordic perspective I would have the market to myself.”

Leads BAML, Barclays, JP Morgan and Pohjola launched the long five year issue on Wednesday morning, going out with initial price thoughts of the mid-swaps plus 70bp area. They moved to guidance of mid-swaps plus 65bp-67bp, before pricing the deal at 65bp over, with orders of €775m good at re-offer.

“I’m pretty happy,” said Iloniemi. “We were able to replace the maturing bond at a quite nice level. If you look at what kind of a new issue premium we paid, that was 5bp-6bp, which is pretty good in today’s world.”

He said that a couple of factors contributed to the success of the issue.

“Obviously we were quite small in size, €500m, and it always helps if you are not looking for huge deals,” said Iloniemi. “And then again we are one of the few remaining double-A rated banks.”

The issue is rated Aa3/AA-.

The Finnish group’s last public issue was a €1.25bn five year covered bond from OP Mortgage Bank on 16 November. Iloniemi said that, market permitting, OP plans to return to the covered bond market in the first half of the year.

Central Bank of Savings Banks Finland meanwhile mandated banks for a possible sub-benchmark euro senior unsecured FRN to be launched after a global investor call yesterday (Thursday) and Helsinki meeting today. Crédit Agricole, LBBW and Nordea are leads.

On Monday Svenska Handelsbanken sold a £250m (€330m, SEK3.01bn) six year senior unsecured deal at 110bp over Gilts via leads HSBC and Nomura.

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