Norway

Covered bond issuers failed to take heed of poor market conditions and, just like lemmings, followed one another with poorly performing deals this week.

Statkraft, the Norwegian state electricity company, made a successful venture into an uncertain corporate bond market with a defensive €500m no-grow bond on Monday.

Four covered bonds have been issued so far this week, but only one deal from Sparebanken Vest Boligkreditt was comfortably oversubscribed. The choice of tenor, deal size and generous spread ensured a solid reception, despite tough market conditions — which Credit Mutuel Arkea will face on Wednesday when it is expected to opens books for another covered bond.

Statkraft, the Norwegian state electricity company, made a successfully defensive venture into an uncertain corporate bond market with a €500m no-grow bond on Monday.

SR-Boligkreditt has mandated leads for a series of investor meetings with a view to issuing its first deal.

Lindorff, the Norwegian debt collection company, priced a €230m tap of its floating and fixed rate bonds on Thursday, reopening the European high yield market after the summer break in encouraging style.

Sparebank 1 Boligkreditt adopted a cautious strategy when pricing its new seven year bond on Friday. The borrower offered a defensive high single digit new issue premium which bankers say has led to a repricing of its curve. Rival bankers said could have an affect on the Norwegian supply which is building in the pipeline. However, bankers on the deal said that the impact was minimal and that pricing was in line with other recent issues.

Covered bond bankers could soon be dealing with a new issuer if plans to separate the Norwegian business of SkandiaBanken AB go ahead. Moody’s has assigned a provisional Aaa rating for the new entity which will be known as Skandiabanken Boligkreditt AS.

Benchmark euro covered bond issuance from a core borrower is expected soon after Rabobank and Swedbank reopened the senior market. Meanwhile, DNB Boligkreditt followed ANZ into the dollar 144A market on Wednesday with a similarly sized deal, in the same tenor and at the same price.

The dollar market continued to sustain covered bonds on Wednesday as DNB mandated leads for a five year, a day after ANZ issued $1.25bn in the same tenor. The Australian bank got better execution than would have been achieved in euros and could have priced even tighter. The excellent result is testimony to the issuer’s long absence and to the depth of demand evident across the dollar fixed income market.

Sparebanken Vest Boligkreditt priced the first Norwegian covered bond of 2015 flat to its existing curve on Wednesday. The deal illustrates that rare issuers from core regions are still able to get superb execution despite the more skittish tone in credit markets lately.

The covered bond primary market is expected to maintain momentum on Wednesday as books for the first deal from Norway and the third from Belgium are expected to open.