Danske Bank will price a Eu1bn five year benchmark backed by a new cover pool at 52bp over mid-swaps this afternoon, with other issuers approaching the market with taps and imminent issues.

Leads Barclays Capital, Commerzbank, Credit Suisse, Danske and Natixis built a book of almost Eu1.6bn at guidance of the low 50s over mid-swaps for a fixed size of Eu1bn. This guidance followed soft-sounding yesterday (Tuesday) in the low to mid-50s.

Oeresund Bridge, linking Denmark and Sweden

The deal is the first to be backed by a new cover pool, “C” or “combined”, backed by a mix of residential and commercial Swedish mortgages. A syndicate official away from the leads said that he would have put the C pool deal about 10bp wider than Danske’s purely residential mortgage “I” pool, which is roughly where the deal was priced, given that an outstanding July 2016 I pool issue was seen at 40bp-42bp over yesterday.

“It looks pretty decent,” he added.

Bernd Volk, head of covered bond research at Deutsche Bank, said that, despite relatively high overcollateralisation requirements, the deal appeared to provide attractive funding for the issuer.

“We highlight that this is one of the few non-German, non-Spanish mortgage covered bonds with a significant share of commercial mortgage assets in the cover pool,” he said, noting that German institutions cannot use separate cover pools for residential and commercial mortgages unless the issuers are separate legal entities. “The OC requirements of 28% by Fitch for this issue compares with 12% in the Danske cover pool I (international) and 13% in the Danske cover pool D (domestic).

“However, with a spread of the low 50s for a five year issue, funding costs for the commercial part in the cover pool C are still attractive for the issuer.”

A syndicate official at one of Danske’s leads said that the transaction had gone very well.

Swedbank Hypotek has mandated Credit Suisse, Danske Bank, LBBW, Natixis and UniCredit for a euro benchmark that is expected to be launched this week. The Swedish deal is set to be a long three year and soft-sounding is likely to start this afternoon, with launch tomorrow.

Banca Popolare di Milano was in the market today with a tap of its November 2015 issue for Eu350m at 165bp over mid-swaps. The obbligazione bancaria garantita was launched for Eu750m in October at 120bp over mid-swaps.

The roadshow for a planned Banca Carige issue ends today and the Italian issuer is understood to be discussing its options with its mandated leads for a deal before the end of the week.

Bankinter of Spain is increasing its November 2014 deal at 265bp-270bp over mid-swaps.