SEB launched the first Swedish euro benchmark covered bond in almost a year today (Monday) to spur into action a dormant euro market, selling a well-received Eu1bn no-grow seven year issue that bankers said was tight but fair and tapped the right part of the curve.

The last Swedish issuer to have tapped the euro benchmark covered bond before today was Svenska Handelsbanken subsidiary Stadshypotek, with a Eu1.5bn five year on 14 March 2012.

Today’s deal is also the first benchmark euro covered bond supply since 29 January, when Berlin-Hannoversche Hypothekenbank sold a Eu1bn five year issue at 1bp through mid-swaps. Syndicate bankers said they expected follow-up supply from other Nordic issuers.

Skandinaviska Enskilda Banken’s last public euro covered bond was a Eu1.25bn 10 year that was launched at the end of March 2011.

Leads Barclays, BayernLB, Crédit Agricole, RBS and SEB went out with initial price thoughts in the mid to high teens over mid-swaps area for today’s new issue, and then set guidance at the 16bp over area before fixing the re-offer spread at 15bp over. Some Eu1.5bn of orders, excluding lead interest, were placed, with books being closed at 1230 CET, according to a syndicate official on the transaction.

He said that the pricing was “great”, with the deal coming inside a Eu1.25bn seven year Nordea Bank Finland issue from 8 January that was priced at 16bp over and is now trading at 17bp over.

Syndicate officials away from the leads also had a positive take on the deal, saying that the pricing was “spot-on”, with one noting that it was a good choice to opt for a seven year maturity.

“It’s the right trade,” he said. “The swap curve is reasonably steep between fives and sevens, and the credit curve is reasonably flat so it makes sense to extend the duration, and both issuers and investors are happy to go out to the seven year point rather than the five year point.”

A re-offer spread of 15bp over represented tight, but correct pricing, according to the syndicate official.

“It’s a fair print, although I’m not sure how much tighter we can go with Scandinavian covered bonds,” he said. “It does feel quite tight at the really low double digits.”

A syndicate banker away from the leads noted the extended period of time that had passed since the last benchmark issue in euros and said that it was not surprising that SEB was able to come at the tight end of IPTs given the general lack of supply and the quality of the assets of the bank.

He said it was not surprising that SEB was able to come as tight as or tighter than Nordea Bank Finland.

“If I was an investor I would definitely go for this trade,” he said, “because I would think it might be the only, or one of the only occasions to bid for SEB, or for a Swedish name, at least with benchmark size issues.”

This is because Swedish banks have limited balance sheets, he said, whose growth in recent years would not justify high covered bond issuance, and because Swedish issuers have access to other benchmark markets besides euros.

Non-domestic Swedish covered bond supply in the 11 or so months since the last euro benchmark has almost exclusively come from Stadshypotek, via deals in Australian dollars, US dollars and sterling, with Swedbank Mortgage having in March 2012 sold a US targeted dollar issue.