Danske subsidiary Sampo Bank is targeting launch of a seven year benchmark covered bond tomorrow (Thursday), with syndicate bankers reporting supportive primary market conditions despite some profit-taking in secondaries, but one warned against being overly ambitious on pricing.

The Finnish issuer has mandated Barclays, Credit Suisse, Deutsche Bank, Natixis and Société Générale, with an investor call scheduled for 1430 CET today (Wednesday) ahead of planned execution tomorrow, according to a lead syndicate official.

He said that Sampo 2016 and 2021 covered bonds were trading at around 21bp over and 43bp over mid, respectively.

The last Finnish benchmark covered bond was a Eu1.25bn five year deal for OP Mortgage Bank that was priced at 32bp over in the middle of May. Sampo has not yet tapped the market this year.

A syndicate official away from the leads said Sampo’s deal could come in the context of the high 30s, while another only said he could imagine that the issuer will pursue aggressive pricing.

Market conditions are positive, said syndicate bankers, despite having softened somewhat over the first two days of the week and some profit-taking being in evidence.

“The market is in good shape,” said one, “and although there’s been some profit-taking there isn’t a sea-change in sentiment.

“The full capital spectrum points to a good backdrop even if equities and indices are down – the primary market is well supported.”

Another syndicate official pointed to a continued imbalance between supply and demand, but warned against being too ambitious on pricing.

He said that a Eu1bn long five year deal from France’s BPCE SFH yesterday (Tuesday) showed that “you cannot go completely overboard with your pricing aspirations”.

BPCE priced its deal at 40bp over mid-swaps, the tightest reoffer spread for a French benchmark covered bonds this year, with zero to only a minimal new issue concession, off the back of a Eu1.5bn order book. (See separate story for more.)

The syndicate banker said that agency spreads have widened over the past couple of months and that some softness has crept into the core corporate market, but that the covered bond market is “hanging on to identical levels from recent weeks”.

“Investors are saying that they won’t buy at any price,” he said. “The approach to pricing has to be fair.”