Danske Bank placed a warmly received Eu1bn seven year issue yesterday (Thursday) using its International cover pool, a transaction that officials at Danske said combined some of the highest quality features of the Nordics.

Leads Barclays, Crédit Agricole, Danske Bank, Santander and UniCredit priced the deal at 30bp over mid-swaps after having gone out with initial price thoughts in the mid to low 30s over mid-swaps area and guidance of the 32bp over area.

Per Høg Jensen, head of DCM financial origination at Danske Bank, said that the pricing was “bang-on, in terms of where we aimed at arriving”.

The deal was well received, he added, with orders amounting to Eu1.65bn.

The deal was Danske’s first euro benchmark since March 2011, when the issuer launched a Eu1bn five year issue backed by its Combined (“C”) cover pool, which consists of loans secured on both commercial and residential property in Norway and Sweden.

The new covered bond issue was backed by Danske’s International (“I”) cover pool, comprising Swedish (47%) and Norwegian (53%) residential mortgages.

“We felt there was good demand for a euro covered bond in our name and investors like the asset class, so we placed this transaction in the euro market using our international cover pool,” Andreas Ligaard, senior funding manager at Danske Bank, told The Covered Bond Report.

Jensen added that the deal offered good diversification for investors.

“They can benefit from the solidity of a Danish national champion,” he said, “and the quality of Swedish and Norwegian assets in the cover pool.”

Ligaard said that the seven year maturity was targeted because there was good investor appetite for the seven year tenor and it was consistent with Danske’s funding needs.

Jensen said that initial price thoughts were set at a level designed to offer some pick-up to the issuer’s secondaries. He said that comparables included outstanding Danske issues, November 2019s and June 2022s. The new issue offered “a few basis points” over those issues, he said.

Outstanding issues of the former Sampo Bank, Danske’s Finnish subsidiary (now renamed Danske Bank, too), were also taken into account, he added.

Danske’s deal came after two other Eu1bn seven year issues hit the market this week, for France’s Société Générale SFH and Sweden’s SEB. The deal also came and in market conditions that were said by syndicate bankers away from the leads to be softer than at the beginning of the week.

Jensen said that there was some volatility in the market yesterday morning.

“We were mindful that this was the third transaction of the week and were prepared to err on the side of caution, given also the volatility in the Bund future,” said Jensen.

“However, we had the view that the key investor demand was less sensitive to absolute yield level.”

Some 85 accounts participated in the transaction, with bank treasuries taking the largest share, 66%. Funds were allocated 20%, central banks and supranationals 9%, insurance companies and pension funds 3%, and others 2%.

“The current low absolute yield levels deterred large participation from asset managers and pension funds and insurance companies,” said Ligaard. “Nonetheless, the issuer experienced interest from its historical followers out of this end-user community.”

Germany and Austria took 51%, the Nordics 29%, the Benelux 6%, the UK and Ireland 4%, Italy 3%, France 2%, Asia and the Middle East 2%.

Ligaard said that Danske aims at a 50:50 split in secured and unsecured funding in 2013.