SR-Boligkreditt up and running with domestic Nkr2bn five year FRN

Jun 5th, 2015

SR-Boligkreditt issued its first covered bond yesterday (Thursday), a Nkr2bn (Eu229m) five year deal that an official at the issuer said represented a decent start to its issuance, even if the pricing was marginally wider than expected amid a volatile market.

SpareBank_1_SR_BankSpareBank 1 SR-Bank has previously financed its residential mortgage lending through pooled issuance via SpareBank 1 Boligkreditt, but largely for regulatory reasons it has established its own issuer, SR-Boligkreditt, as have some of its peers.

“We are very pleased that we have now placed our inaugural Norwegian krone covered bond,” said Dag Hjelle, head of treasury at SpareBank 1 SR-Bank.

The Nkr2bn five year issue was priced at three month Nibor plus 35bp.

“The pricing was a touch higher than we had expected,” said Hjelle, “but there was some volatility in the market. In Norway it’s quite transparent which group you price within and just before the deal I was guessing we would come 2bp tighter. Compared to pricing earlier in the week it could look like a new issue concession of 3bp, but due to price movements during the week it came close to zero – we’re good with the level.

“I’m glad we managed to print such a big size,” he added. “It is the first time a Norwegian krone covered bond issue has been opened with a Nkr2bn size this year.”

The bond is LCR-eligible, hence the majority of orders – 73% – came from bank treasuries, said Hjelle. The Nkr2bn size was printed on the back of an order book of Nkr2.8bn and divided between 26 Norwegian investors.

The joint bookrunners were Danske, DNB, Nordea, SEB, SR-Markets and Swedbank.

Yesterday’s deal is the first off an EMTN programme that was signed on Tuesday.

“It’s now up and running, and we are happy about that,” said Hjelle, “and we will just continue utilising the company, trying to get it well established.”

The issuer plans to raise some Nkr8bn per year from this year until 2017 and Hjelle has said it is open to private placements, also in foreign currencies.

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