Nordics

A Eu1.25bn two year deal for Swedish Covered Bond Corp this (Thursday) morning priced 18bp wider than comparable issuance just two weeks ago signalled the repricing of the covered bond market. But while some issuers and investors were rueing the leap in spreads, many bankers were welcoming the new realism being adopted by this week’s borrowers, also including CIBC, Sparebank 1 and possibly an Italian before the week is out.

Sparebank 1 Boligkreditt demonstrated that the five year part of the curve is open to the right deals by pricing a Eu1bn transaction this (Wednesday) lunchtime. The new issue also showed that covered bond issuers may find that paying up is the only way to compete for investors’ attention, as demonstrated by the level at which a potential new issue is being soft-sounded.

Issuers could this week see any plans for issuance frustrated by competition within the covered bond market and also from the senior unsecured market, with spreads coming under pressure from both quarters. However, that is not stopping a wide array of names seeking out the smallest opening and this week has already seen more supply attempted in the same buckets as last week.

Swedbank has closed books on its Eu1bn two year issue and priced the mortgage backed deal at 22bp over mid-swaps, the middle of guidance, bringing to a successful conclusion an exercise that had several hurdles to overcome along the way.

Swedbank opened books on a two year mortgage backed benchmark this (Thursday) morning some 5bp back from where some accounts were sounded out earlier this week, suggesting that the issuer was suffering from launching a deal in almost direct competition with Skandinaviska Enskilda Banken, which priced its Eu1bn three year mortgage backed deal yesterday (Wednesday) afternoon.

Skandinaviska Enskilda Banken closed books on the first post-holiday benchmark this (Wednesday) morning, but its execution gave little cause for celebration. The potential for competing issuers’ plans to clash in what is expected to be a busy period has also been made clear, with negative implications for spreads.

Skandinaviska Enskilda Banken AB has mandated Deutsche Bank, Goldman Sachs, SEB and UBS to launch a new mortgage backed benchmark in the coming weeks once the holiday season has drawn to a close.

In brief: George Soros calls for the introduction of covered bonds based on Denmark’s traditional balance principle in an article in the Financial Times today (Tuesday).

In brief: Sparebanken Vest is set to join the Norwegian covered bond market, having set up Sparebanken Vest Boligkreditt AS. The bank has said that it plans to launch its first issue this year.

Deutsche Bank may have come first in the all benchmarks ranking for the first half of 2008, but it was by no means the strongest across all markets. Here The Cover reveals the top banks in each of the biggest sectors and examines where the leading banks’ weaknesses lie.

In brief: Iceland’s Kaupthing Bank kicked off its plans for quarterly covered bond issuance last week, when its offering of pass-through structured bonds was closed to domestic investors.