Nordics

Norway’s Storebrand group is turning to covered bond issuance through Storebrand Kredittforetak AS. Its first issue is expected soon, but, according to Ingunn Gurvin, head of group treasury at Storebrand, the issuer will not be entering the jumbo market for the foreseeable future.

Danske Bank has closed the books for the first euro denominated Danish jumbo covered bond, a two year deal backed by non-Danish mortgages marketed at guidance of the mid-swaps plus 10bp area.

Glitnir has added covered bonds to its funding arsenal to help overcome the volatility that has been threatening Icelandic banks this year, selling Ikr56bn (Eu474m) in two tranches off a Ikr100bn programme.

Norges Bank Investment Management has been telling issuers and other counterparties that reports it is reassessing the position of covered bonds in its portfolio are “rubbish”, saying that the product continues to have the same weighting in its benchmark.

Volatility can produce both investor conservatism and opportunities for new, sometimes brave, issuers. The contrasting fortunes of Norway’s banks’ debut covered bond issues before and after the crisis have shown the importance of timing. Japan and Italy, meanwhile, appear to have time on their side.

The strength of an issuer’s domestic investor base has emerged as a key determinant of covered bond spreads since the crisis began last summer. Those that benefit have been able to relax, while those reliant on foreign investors have redoubled their efforts to penetrate new pockets of money.

It might seem unbelievable now, but when Abba went on their inaugural European tour in 1974 a lack of demand meant that their first German concerts were not sold out. But Sweden’s four euro jumbo covered bond issuers faced no such problems last week, with German investors applauding their harmonious approach.

Canadian Imperial Bank of Commerce plans to roadshow a new covered bond programme early in the second quarter, following in the footsteps of not only those officially in the pipeline, but a variety of other issuers who have been visiting investors but adopting a lower profile.

Sweden’s Nordea Hypotek AB is to return to the covered bond market, having mandated BNP Paribas, HSBC, Nordea Markets and UniCredit as lead managers for a new euro denominated benchmark from it Eu10bn covered bond programme. Two Portuguese issuers are gearing up for their scheduled roadshows, with the mortgage pipeline showing signs of getting moving again.

Sparebank 1 Boligkreditt has priced its second covered bond, a Eu1bn long three year priced at 8bp over mid-swaps this afternoon. The Norwegian issuer was reported to be pleased with the balance of funding and pricing it had achieved in successfully placing its mortgage backed bond after a period dominated by public sector deals.

Norway’s Sparebank 1 Boligkreditt has returned to the market today with a long three year benchmark sized deal. Coming after a period dominated by German sector Pfandbriefe, the deal is a further vote of confidence in the Norwegian issuer after it reopened the primary market in September 2007 with its inaugural deal.

With German public sector issuers returning in style this week, mortgage Pfandbrief and Scandinavian issuers are being tipped as likely successors in a market where the well stocked pipeline is as much a list of those that can’t access the market as a guide to who will be next. Indeed the problem for the primary market is that it looks like those that could issue won’t, and those that would issue can’t.