A Eu500m five year Junior Covered Bond issue delivered the funding diversification Nykredit Realkredit was seeking to achieve on its second benchmark in euros, according to an official at the Danish issuer, with participation in the transaction by some new investors a “very reassuring” development.

Morten Bækmand, head of investor relations at Nykredit, said that it confirmed the experience of the bank’s debut euro benchmark JCB with respect to the type of accounts that participated.

“These were your classic buyers of senior unsecured debt,” he said. “Very little went to trading accounts, with nearly all orders from real money investors.”

In geographic terms the bulk of demand came from Germany and Denmark, each accounting for roughly 30%, followed by Finland and France, with the rest spread across Europe and some going to the Middle East, according to Bækmand.

“Our funding diversification objective was very much met, and we are very happy with this,” he said. “There were also some completely new investors, which is very reassuring.”

Leads BNP Paribas, DZ Bank, JP Morgan and Nykredit Markets priced the deal yesterday (Wednesday) at 200bp over mid-swaps, the tight end of guidance of 200bp-210bp over.

The pricing was satisfactory given the current market backdrop, said Bækmand.

“We are exposed to these market conditions like everyone else,” he said, “and are very happy to have found a window amid this turmoil.”

Bookbuilding began on Tuesday afternoon and while deal execution continued the next day amid a softening of market tone, Bækmand said that there was very little price sensitivity and that it was important to give smaller accounts time to carry out credit work.

“When we opened the books we had indications that they would be OK, and we were confident that some of the smaller orders would come in,” he said. “The deal execution went well.”

In the end nearly Eu700m of orders were gathered from more than 90 accounts. Nordics took 53%, Germany and Austria 29%, France 8%, the UK 4%, Benelux 3%, Switzerland 1%, southern Europe 1%, and others 1%. Banks were allocated 45%, asset managers 31%, pension funds 11%, insurance companies 7%, SSAs 4%, and others 2%.