Nordea Bank Finland reopened the euro benchmark covered bond market after an August hiatus by launching a well-received five year deal today (Tuesday), while a German issuer and Italy’s UniCredit have been mentioned as candidates for further supply.

The FIG primary market got off to a good start yesterday (Monday) with senior unsecured deals for BNP Paribas and Svenska Handelsbanken. The latter was first out of the blocks yesterday morning, and Nordic issuers were also responsible for getting the ball rolling in benchmark covered bonds.

Norway’s Sparebanken Vest Boligkreditt yesterday announced a mandate for a European roadshow starting on Monday (26 August) and Nordea announced the mandate for a five year issue that it launched this morning, despite what syndicate bankers said were softer market conditions.

The week is expected to bring further benchmark covered bond supply, with a German issuer said to be eyeing a transaction for possible launch tomorrow. Peripheral supply is also said to be in the works, with Italy’s UniCredit named as a potential new issue candidate.

A syndicate official suggested that today’s weaker market tone may have deterred issuance from the periphery, and that sentiment is a bigger factor for peripheral issuers than those from the Nordic area, for example. However, there is still time to make a move before an anticipated pick-up in activity in September, he added.

On Nordea Bank Finland’s deal leads Barclays, Deutsche Bank, Nordea and RBS went out with initial price thoughts of the 10bp over mid-swaps area and then guidance of the 8bp over area, before pricing it at 7bp over for a Eu1.5bn size. More than Eu3bn of orders were placed, with some 125 accounts involved.

Syndicate officials away from the leads said the deal went well, unsurprisingly so, and generally found the pricing appropriate, although one felt that the guidance was unnecessarily defensive given the quality of the issuer and the jurisdiction, and the performance of recent deals.

Another said that the issuer initially showed a new issue premium, of some 5bp, but that it ended up close to flat to secondary levels.

Some said that the transaction showed how the market has tightened over the past few weeks.

“The question was how tight the first new issue would be able to come, how close to the new tights,” said one, “and this deal is close to flat to secondaries.

“It remains to be seen if this will be true for other countries.”

Recent euro benchmark covered bonds are 5bp-10bp tighter compared with the end of last quarter, according to another syndicate banker.

Sparebanken Vest to up euro activity

Norway’s Sparebanken Vest Boligkreditt is planning to return to the euro benchmark covered bond market for the first time since January 2012 and will go on a roadshow next week in preparation of such a move. Danske Bank, HSBC, LBBW and Natixis have the roadshow mandate.

Egil Mokleiv, Sparebanken Vest Boligkreditt

Egil Mokleiv, managing director, Sparebanken Vest Boligkreditt, said that the issuer hasn’t tapped the public euro markets for a long time. The company was established in 2008 and, being focused on raising long term funding, has had no major redemptions to refinance so far.

“We haven’t issued a public covered bond for around 18 months and are planning a public deal this fall,” he said, “so we thought it made sense to update investors and get feedback on their views on Norwegian covered bonds in general and Sparebanken Vest Boligkreditt’s in particular.”

Sparebanken Vest Boligkreditt intends to issue more frequently, added Mokleiv, since next year is the first year that the issuer has to carry out refinancing of some size.

“We have been growing based on purchases of mortgages from the parent bank and most of our funding is long term” he said.

ANZ New Zealand has mandated Barclays for a roadshow starting 2 September, while La Banque Postale is understood to be holding some further credit update meetings next week after having been on a roadshow earlier this summer, with Natixis and UniCredit.