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Sparebanken 1 the best of the rest in survey

By Bill Thornhill
21 Feb 2019

Sparebanken 1 Boligkreditt’s (Spabol) 10 year has the highest covered bond mark of all deals issued by any bank outside the eurozone this year on GC BondMarker. SEB issued the highest scoring Swedish deal and Royal Bank of Canada (RBC) issued the best ranking Canadian covered bond this year.

Five Norwegian covered bonds have been issued so far this year in euros but Spabol’s 10 year leads the way with a GC BOndMarker score of 9.38.  

This was the second highest overall mark for any covered bond issued in 2019 below the leading deal issued by Rabobank with its €2bn 10 year.

GC BondMarker is a new tool for the covered bond market, exclusive to GlobalCapital, which rates the success of covered bonds on a scale of zero to 10 across a range of criteria: timing, pricing and distribution (*).

Spabol’s transaction posted the best performance of all Norwegian deals, tightening 3bp in the week after launch and, at €1.25bn, it also happened to be one of the largest.

DNB Boligkreditt’s €1.5bn seven year launched at the beginning of this year was somewhat larger. However it was issued into a difficult market and did very well to tighten by 0.5bp, when many other transactions issued during that period had initially widened.

The Norwegian deal was seconded by Sor Boligreditt which issued a relatively diminutive €500m seven year. Yet, with 100 accounts on board, the bonds attracted the most diverse order book of any Norwegian deal issued so far this year.

SEB ranks high

Among Swedish lenders SEB’s €1.25bn deal was not only the largest from the region, but with 130 investors on board and a 4bp tightening in the week after launch, the deal metrics also looked good against its peers.

These factors were accurately captured by the covered GC BondMarker with an overall score of 9.3. This was, not only the highest for a Swedish covered bonds issued this year, but also the third highest overall mark of any deal issued in 2019.

Among the Canadian banks, Royal Bank of Canada’s €1.75bn five year attracted a score of 8.55, putting it well ahead of the four other Canadian euro benchmarks issued this year. 

Despite some concern that the deal size was too large, 120 investors were allocated bonds, which subsequently went on to perform by 1.5bp in the week after launch.

Timing played an important role as the RBC deal was launched more recently when market conditions had improved greatly. 

In contrast, Bank of Nova Scotia and Bank of Montreal opted to issue earlier in the year, when the market was floundering and competition for investors’ attention was higher. As a result the performance of those deals was initially weak.

(*) Half of the mark is derived from a survey based on the average score given by market participants. 

The other half of the mark is automatically calculated using a range of metrics — such as the deal’s subscription ratio, its performance, the granularity of the order book and the transaction’s size (see here for more details). The score for each deal can be found in the Covered Bonds Priced Deals Database.   

By Bill Thornhill
21 Feb 2019