Nordics

Sweden’s Nordea Hypotek opened the books on a new Eu1.5bn three year deal this morning, with initial guidance of the 12bp over mid-swaps area. The price has been fixed at 11bp over mid-swaps after leads BNP Paribas, HSBC, Nordea and UniCredit received Eu2bn of orders.

Finland’s OP Mortgage Bank has joined the queue of issuers planning to tap the market, but is content to wait its turn rather than push to the front. Meanwhile an issuer further down the queue has moved to the back, another has denied it was ever lining up to issue, and a third is keeping its debut to itself.

DnB Nor has kept up the Norwegian theme to the week with a Sfr200m (Eu126m) eight year deal yesterday (Tuesday), making it the first foreign covered bond issuer to tap the Swiss franc market since the Swedish Covered Bond Corp on February 19.

Danske Bank yesterday (Monday) afternoon increased the size of its euro jumbo debut from Eu1bn to Eu1.25bn, in contrast to its decision earlier this year to eschew international issuance for more attractive domestic funding. German issuers are seen among the likely candidates to add further supply.

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.