Nordea Kredit and Nykredit Realkredit are running auctions in parallel after Nordea held the first of three days of auctions yesterday (Tuesday), with analysts noting that the spread difference between the issuers’ one year bonds is more in line with expectations after an “outlier” yesterday.

Anders Aalund, chief analyst at Nordea Markets, said that Nordea has auctioned Dkr14bn in one year bonds over the past two days, split equally between two allotments of Dkr7bn.

One year Nykredit bonds were auctioned at 35.5bp over Cita today (Wednesday) and one year Nordea bonds at 30.1bp over, according to Aalund. That compares with 33bp over for Nykredit one year bonds yesterday and 31bp over for Nordea one year supply.

A 2bp difference between the spreads on Nordea’s and Nykredit’s auctions yesterday was an outlier, he said.

“Our estimate was 6bp,” he said. “The 5.5bp difference from today is more in line how the spreads should be, and also with the way Nordea and Nykredit were trading before the auctions.”

Jan Weber Østergaard, senior analyst at Danske Bank, said that yesterday’s auctions were strong, and that spreads on one year non-callable bullet bonds refinancing adjustable rate mortgages (ARMs) have tightened by some 5bp since Monday to reach around 30bp over Cita.

At 2bp the spread difference between one year Nordea and Nykredit bonds auctioned yesterday was at the low end of Danske analysts’ expectations, he said.

“Today the difference is 5bp, which is more in line with levels in the market,” he said.

The average spread on one year bonds has been 34bp during these latest auctions, according to Østergaard, slightly tighter than an average of 38bp-39bp at March auctions.

Demand has been healthy, he said, with bid-to-covers higher on the past two days after reaching a low on Monday.

The lowest bid-to-cover for one year ARM bonds was on 28 August, when it was around 2, according to Østergaard, but it rose to 2.2 at the end of August and is now at 2.5.

“Today the bid-to-cover on Nordea’s auctions was 2.6 and 2.45 on Nykredit’s,” he said. “Bid-to-covers started high and fell a bit, but spreads still tightened a bit, possibly because the investors who really wanted the bonds still bid.

“Overall spreads and bid-to-covers only changed a little.”