Swedbank $1bn senior offers arb, diversification

Swedbank priced its second US dollar senior unsecured benchmark on Tuesday, a well received $1bn (Eu764m/Skr6.34bn) five year deal that bankers said offered attractive funding versus euros.

The deal was priced at 107bp over US Treasuries on the back of nearly $2bn of orders placed by some 90 accounts.

A syndicate banker at one of the leads – Bank of America Merrill Lynch, Barclays, BNP Paribas and Citi – said that the re-offer spread incorporated a new issue premium of 2bp-3bp to make for a “very aggressive” print.

The deal is Swedbank’s second five year unsecured offering in less than six months, noted Robin Bagger-Sjöbäck, Nordic FIG DCM origination, Crédit Agricole CIB, and came at a euro equivalent level of 55bp over mid-swaps.

“With Swedbank’s euro denominated February 2017s quoted at z+63 bid on Tuesday, the outcome offers very cost efficient funding at the moment,” he said.

A syndicate banker away from the leads agreed that Swedbank’s visit paid off in terms of arbitrage versus euros.

“Others are preparing to follow a successful Swedbank dollar deal as pricing beats many alternatives,” he said.

The lead syndicate official said the dollar level “definitely” provided a more attractive level than in euros, but that there was also a diversification element to the transaction, with the issuer having committed to selling at least one US dollar senior unsecured and one US covered bond benchmark per year.

“It was a good opportunity given where they did their September deal and went very well,” he said, adding that other Nordic issuers will probably be looking to follow up on Swedbank’s US move.

Swedbank made its US senior unsecured debut via a $1bn five year deal in September, and those bonds were trading at around 95bp over Treasuries yesterday – 104bp over on a curve adjusted basis, according to the syndicate official. The September 2017s were re-offered at 150bp over.

The new Swedbank deal tightened 9bp, he added, trading at around 98bp over bid this afternoon.

“The issuer timed it very well and got ahead of what we expect to be a busy Yankee calendar,” he said. “They leveraged off an extensive roadshow in the senior unsecured space and after a 12bp concession at the beginning got it down to 2bp-3bp.

“People are positively inclined on credit and think about it as a concession to Svenska Handelsbanken but potentially slightly through maybe a Nordea.”