A Sampo Housing Loan Bank Eu1bn 10 year covered bond priced at the wide end of guidance yesterday (Tuesday) was deemed a satisfactory transaction by the issuer in light of market conditions.

Leads Danske, HSBC, Natixis, Société Générale and UniCredit built an order book of Eu1.1bn in the two and a half hours books were open for. Guidance was 55bp-57bp over mid-swaps and the issue was priced at 57bp over.

“It was launched in a difficult market, with a very cautious approach because of Greece,” Claus Jensen, chief funding officer at Danske Bank, of which Sampo is a subsidiary, told The Covered Bond Report. “This is clearly affecting investors’ appetite for new deals.”

Greece’s sovereign long term credit rating was downgraded to triple-C by Standard & Poor’s on Monday.

Sampo decided to come to market because the issuer had been preparing its cover pool for a transaction for the last few months, said Jensen.

“The syndicate group advised us to choose a 10 year maturity because there was still some interest in the long end and in a Nordic issuer,” he said. “Investors are said to be cash rich at the moment.”

A 2016 issue for Danske, backed by a pool comprising a mix of commercial and residential Swedish mortgages, was the most recent benchmark from the group. That was launched in March at 52bp over and was trading at 48bp-49bp mid when Sampo’s 10 year deal emerged. Other pricing comparables included a Nordea Bank Finland 10 year at 51bp mid and a DnB Nor Boligkredit 10 year launched last week, also at 51bp.

“We think it was a fair price,” said Jensen, “which was in line with other 10 year issues we have seen from the Nordic region. We anticipated the trade coming at the wide end of guidance when we launched, so were not surprised in the end.”

A syndicate official at one of the leads said that the trade was “respectable” given the circumstances.

“You would always hope for the tight end of the range” said a syndicate official from one of the leads, “but now is not the time to squeeze basis points out of a trade.”

Ten year yields have dropped since April, noted Jensen, affecting the ability of issuers to offer a 4% coupon.

“We have seen a significant drop of around 50bp in 10 year yields,” he said. “That is probably cooling the appetite from long term investors somewhat because they aren’t able to get that 4% coupon.”

The new issue was priced with a 3.875% coupon.

Germany and Austria took 56%, the Nordics 28%, France 9%, Switzerland 3%, the Benelux 2%, and others 2%. Insurance companies were allocated 35%, fund managers 28%, banks 25%, and central banks and agencies 12%.