Sampo Housing Loan Bank has mandated for a deal that is expected next week, joining several others that have been finishing roadshows in eyeing what bankers said was a choppy market. Westpac NZ got its debut away yesterday (Thursday) in spite of the tougher conditions.

Covered bond bankers remarked upon the market’s ability to absorb six deals totalling Eu5.5bn while deals were more difficult to execute or pulled in other asset classes.

“Over the course of this week there was fabulous supply,” said one. “At the same time, the market backdrop has been a bit choppy.”

European equity indices fell today (Friday) after weak Chinese economic data was released, while Bund futures rose. Disagreement between the German government and the European Central Bank over any plans for a Greek debt restructuring has also spooked the market.

“The market is not as good as it has been,” said a syndicate official, “and it’s not because any transaction has gone wrong. If you look at Bunds, you can see money has been thrown at Germany.”

A banker said that there were conflicting ways in which issuers considering tapping the market could read and react to market conditions.

“This market really doesn’t look that nice,” he said. “And I’ve heard talk of traders already trying to get rid of inventory before the end of the quarter.

“But then again the risk of a major derailment coming from Greece means that issuers may want to get something out while they can.

Sampo Housing Loan Bank, a Finnish subsidiary of Danske, mandated Danske Bank, HSBC, Natixis, Société Générale and UniCredit for a long dated euro denominated covered bond. The leads are premarketing the trade ahead of issuing Tuesday or Wednesday of next week, following a holiday in France and Germany on Monday.

The deal is only Sampo Housing Loan Bank’s second benchmark since it was acquired by Danske in 2006. A syndicate official at one of the leads said that the other, a December 2015 sold in November 2010, was trading at 32bp mid today.

The issuer is understood to be looking at a seven or 10 year maturity, with a final decision to be made next week. A banker away from the leads said that he expected the 10 year maturity to be chosen, with guidance of the 55bp area likely for such a deal. Norway’s DnB Nor Boligkreditt priced a Eu1.5bn 10 year at 53bp over mid-swaps on Wednesday on the back of guidance of the 55bp area.

Several banks were on roadshows this week and will be looking to tap the market. These include Aktia Real Estate Mortgage Bank, ANZ National, Clydesdale Bank, and ING-DiBa.

Westpac NZ’s Eu1bn five year deal was priced at 75bp over mid-swaps, in the middle of guidance of the 75bp area. Leads Barclays Capital, BNP Paribas and UBS built a book of Eu1.3bn for the new issue.

“We announced the mandate on Wednesday afternoon and went out with a whisper,” said a syndicate official at one of the leads. “It allowed us to build a shadow book and approach Asia.”

Distribution figures had not been finalised by the time The Covered Bond Report went to press.

The only other New Zealand covered bond in euros was a BNZ seven year, which the syndicate official said was trading in the low 70s mid over swaps.

“We also looked at other jurisdictions for pricing,” he added. “A lot of investors gave feedback on what they though pricing should be.”

Bankers away from the leads said that they were surprised that Westpac NZ needed to pay such a level, despite acknowledging that it appeared to be the spread necessary for the deal to get done.

“Westpac NZ was a pretty good trade though,” said one.