A Länsförsäkringar Hypotek Eu1bn no-grow three year covered bond attracted Eu1.8bn of orders from some 90 accounts yesterday (Wednesday), with the issuer declaring itself satisfied with its investor diversification strategy. Meanwhile, a DnB Nor Boligkreditt 10 year wrapped up the issuer’s funding for the first half

Leads HSBC, Natixis, Nordea, UBS and UniCredit tightened pricing to 28bp over mid-swaps from initial guidance of the 30bp over mid-swaps area for LF Hypotek’s benchmark.

The Nordics took 37%, Germany and Austria 34%, eastern Europe 9%, Asia 5%, the Benelux 4%, the UK 3%, Switzerland 3%, and others 5%. Banks took 52%, central banks 22%, and asset managers and others 26%.

“It has gone extremely well,” Göran Laurén, president at LF Hypotek, told The Covered Bond Report. “We’re happy with the investor response that led to a well spread distribution across Europe and also a good performance in the secondary market.

“We are going to have very solid and strong name recognition outside of Sweden now,” he added. “This was an important part of strategy.”

The issue was LF Hypotek’s second euro benchmark

“We had our inaugural transaction a year ago,” said Laurén, “and we told investors we would issue again in 12-18 months. During the spring and most recently, during the last week of May, we have done a lot of investor work and we have decided to issue on the back of the good feedback we got.”

A three year maturity was reached on the basis that the issuer usually issues on the two to seven year part of the curve, he added.

The issuer raises the bulk of its funding in the local Swedish krona market.

“This time we ended up with pricing slightly over the domestic Swedish market,” said Laurén. “Our last issue was under. It’s all related to the basis swaps.”

Leads BNP Paribas, Commerzbank, UBS and UniCredit built a book of Eu2.2bn for DnB Nor Boligkreditt’s Eu1.5bn 10 year deal yesterday. The Norwegian issuer had been monitoring the market for a potential 10 year deal for some time; it launched a Eu2bn five year in January and has since accessed the US dollar and Aussie dollar markets.

“It was in our plans to do something before the summer, but since we were well ahead of our funding plans there was absolutely no rush,” said Thor Tellfsen, senior vice president and head of long term funding at DnB Nor. “Interest rates were coming down at the beginning of May so we couldn’t get a 4% yield, and we decided to sit and wait for a while.

“We knew we wouldn’t get a 4% yield here, but it was a question of waiting until investors acknowledged that they wouldn’t get that level anymore. Other issuers had come in the long end in the meantime, but they paid a significantly higher spread.”

The new issue was priced at 53bp over mid-swaps, following guidance of the 55bp over mid-swaps area.

“We are happy with the spread and the success of the transaction,” said Tellefsen.

Banks were allocated 41%, fund managers 28%, insurance companies 28%, and central banks 3%. Germany took 48%, France 28%, the UK 2%, Switzerland 5%, the Benelux 8%, Austria 1%, Nordics 6%, and others 2%.

“We have fulfilled our funding plan for the first half, raising Eu11.5bn in total with an average maturity of longer than seven years,” said Tellefsen. “We have significantly less to do in the second half.”