SEB raises Eu750m in opportunistic senior unsecured move

Skandinaviska Enskilda Banken (SEB) sold a Eu750m (Skr6.51bn) five-and-a-half year senior unsecured bond on Tuesday, taking advantage of an improvement in market conditions to launch an opportunistic trade, an official at the Swedish bank told Nordic FIs & Covered.

SEB went out with initial price thoughts of the low 50s over mid-swaps at the European open on Tuesday, which represented a low double-digit concession versus comparable secondaries, according to an official at one of leads BNP Paribas, Goldman Sachs, HSBC and SEB. He said that this attracted a very high quality order book, driven by European real money accounts.

Guidance was revised to the 50bp area and, on the back of a Eu1.1bn order book comprising 113 accounts, the issue was re-offered at 48bp over, with the new issue premium having narrowed to a single-digit level.

John Arne Wang, head of treasury management at SEB, said that the issuer has more opportunistically monitored the market for a couple of weeks.

“We are in the process of working on the 2014 plans and what adjustments we would like to do in that respect,” he said. “Although the 2013 senior target has already been reached, balance sheet growth and a conservative strategy of keeping a considerable funding buffer made it relevant to move at this time.

“We saw a chance to take advantage of a more favorable market backdrop, with indices tightening and equity markets largely positive,” he added. “Overall we felt the issuance conditions had improved despite the Verizon deal which had a lot of focus in the market.”

US communications company Verizon sold a record $49bn (Eu36.8bn) bond on Tuesday.

Wang said that the deal also successfully overcame the recent focus on subordinated supply in the FIG market.

He said that the five-and-a-half year maturity was chosen because it fitted perfectly in a gap in the maturity profile. Moreover, SEB’s last senior benchmark in the euro market was a seven year when the bank issued a Eu1bn transaction in November 2012.

“We are quite satisfied with the result, pricing one of the tightest five year FIG deals of 2013,” said Wang. “As we have not been in the euro senior market this year, we saw it as an opportune time to add to our euro benchmark curve.

SEB is unlikely to launch any further benchmarks in senior or covered format this year given its funding needs, according to Wang. In covered bonds the remaining needs are being covered in the domestic market as SEB issued both a dollar and euro benchmark earlier this year.

On the new issue, France was allocated 30% of the bonds, Germany and Austria 26%, the Nordics 16%, Belgium, Luxembourg and Switzerland 8%, Asia 6%, the UK/Ireland 6%, the Netherlands 5%, and others 3%.

Fund managers took 43%, banks and private banks 30%, central banks and other official institutions 19%, corporates 4%, and insurance companies and pension funds 4%.