Deals for DnB Nor Boligkreditt and Länsförsäkringar Hypotek at the long and short end of the curves, respectively, proved demand for core issuers in spite of a weaker tone to the market today (Wednesday), said bankers.

Equity markets were weaker and the market was said to be a little bit quieter than the last couple days.

“Issuers will get trades done even if the market looks a little bit softer,” said a banker away from today’s deals, who said investors have money they need to put to work.

Another agreed and said he was encouraged by the day’s supply.

“Away from covered bonds, things in the senior and sub markets are complicated,” he said, “but in covered bonds core appetite is still there at very tight spreads and there is a lot of liquidity investors available.”

DnB Nor Boligkreditt is issuing a Eu1.5bn 10 year at 53bp over mid-swaps. Leads BNP Paribas, Commerzbank, UBS and UniCredit tightened the spread to 53bp over from initial guidance of the 55bp over mid-swaps area.

A banker away from the leads suggested pricing was on the attractive side.

“It went well but the spread was very cheap,” said one. “I think the reason they went for the 55bp area is because yields have dropped and they couldn’t get the 4% coupon, but I don’t think it was necessary. Investors have cash they need to invest.”

Another banker considered the strategy the leads chose to be highly effective.

“Being able to price inside the guidance proves the demand for a core issuer,” he added.

The books were closed at 1120 CET with orders in excess of Eu2.2bn.

“It’s obviously a strong achievement if they were able to print Eu1.5bn,” said the banker.

And another said that the initial mid-50s area was where he would have pitched the deal, saying that it was at an appropriate spread to Nordea paper at this level.

Länsförsäkringar

Länsförsäkringar Hypotek launched a Eu1bn no-grow three year at the 30bp over mid-swaps area. Leads HSBC, Natixis, Nordea, UBS and UniCredit built books in excess of Eu1.8bn and tightened the spread to 28bp over.

“From what we saw in terms of an update,” said a syndicate official away from the leads, “there was clearly good demand.

“It was a defensively chosen maturity,” he added.

Another banker away from the leads said he was surprised by the maturity.

“I think the rationale behind that is they’re trying to build a curve,” he added.

However, another said that his understanding was that LF had always been considering anything from a three to a five year trade.

Credito Emiliano has mandated an inaugural mortgage backed OBG to leads Barclays Capital, BNP Paribas, HSBC, RBS and Société Générale. The issue is expected to be launched this week. Banca Carige is also said to be monitoring the market, as well as some Spanish issuers, while France’s CM-CIC is understood to be considering a five to seven year transaction.

BNZ priced a A$700m (Eu512m) five year Australian dollar covered bond at 88bp over swaps overnight with HSBC, RBC and RBS. A banker at one of the leads said that this was above the minimum A$500m originally targeted, with oversubscription also allowing pricing at the tight end of the 88bp-90bp guidance.