Sweden’s Stadshypotek is reopening the Kangaroo market for covered bonds with a dual tranche five year deal that is only the second covered bond to be sold into Australia by a European issuer since the crisis, with levels having been a factor in the deal’s timing.

Leads Commonwealth Bank of Australia, HSBC, RBC Capital Markets and Westpac Banking Corporation are marketing A$200m (Eu160.6m/Skr1.37bn) minimum five year fixed rate and floating rate tranches at spreads of 105bp over mid-swaps and three month BBSW, respectively.

The order books were opened late afternoon Sydney time today (Thursday) and are due to be closed tomorrow (Friday) afternoon, according to a syndicate banker at one of the leads.

A syndicate banker away from the leads welcomed the transaction.

“Finally something in Aussie dollars, a bit of action there,” he said. “Spreads have improved a lot so it’s worth looking at different currencies.”

Bengt Edholm, head of treasury at Svenska Handelsbanken, parent of Stadshypotek, last month told The Covered Bond Report that the all-in cost of issuing in Australia was too high, and that it was waiting for sentiment to improve before going ahead with a deal.

The lead syndicate banker said that there has been “a reasonable amount” of movement in the euro-US dollar basis, which affects the Australian dollar basis, and that levels had been reached with which the issuer could feel comfortable.

The 105bp over level equates to around 36bp over three month Euribor, he said.

The last Swedish euro benchmark was a Eu1.5bn five year for Stadshypotek that came at 30bp over mid-swaps in March.

A reasonable amount of on and offshore demand is expected to be registered for the Kangaroo deal, The Covered Bond Report understands.

Stadshypotek’s transaction is the first Australian dollar covered bond since March, when ANZ Banking Group sold A$3bn dual tranche four year issue at 95bp over. The last Kangaroo issue was a A$600m five year in June 2011 from DNB Boligkreditt, the only other Nordic issuer to have tapped the market. Canadian Imperial Bank of Commerce sold a A$700m five year deal in March last year.

No other European issuer has sold a Kangaroo covered bond since DNB Boligkreditt, although Stadshypotek and its country peer the Swedish Covered Bond Corporation (SCBC) have been eyeing the Australian market for some time, with both having established Australian MTN programmes towards the end of last year. Stadshypotek went on a non-deal roadshow in November to present its credit story to investors.