Caffil and Nordea Bank Finland got off to a confident start in the new year with well oversubscribed 10 year and five year benchmark covered bonds yesterday (Tuesday), raising Eu1bn and Eu1.5bn, respectively, on the back of combined demand of some Eu4bn.

Nordea Bank Finland

Caisse Française de Financement Local priced its obligations foncières issue at 36bp over mid-swaps on the back of nearly Eu1.8bn of orders from just over 80 accounts, with leads Barclays, BNP Paribas, Commerzbank, LBBW and Natixis able to tighten the spread from initial price thoughts of the 40bp over area and then guidance of the 38bp over area.

The deal is Caffil’s third euro benchmark covered bond since emerging as the successor to Dexia Municipal Agency and Philippe Mills, CEO of Société de Financement Local (SFIL), the parent of Caffil, said he was pleased with how investors had received it.

“One year after its creation under the impulse of the State, Caisse Française de Financement Local is now a recognised borrower in the international bond market, as testified by the quality and variety of investors that have underwritten this first issue of the year,” he said.

A syndicate official away from the leads said that the pricing on Caffil’s deal is in line with December levels.

An official at the issuer said that at 36bp over mid-swaps, the deal came flat to Caffil’s curve and 6.5bp wider than French government bonds. It makes inroads into a financing programme of Eu4bn-Eu6bn for the issuer in 2014, up from the Eu3bn raised in 2013 through public issues and private placements, according to the official.

He noted that the distribution of yesterday’s issue partly reflects marketing efforts in 2013 across Asia and Europe, with Asian investors taking 10% and Germany and Austria 56%. France took 14%, Asia 10%, Nordics 7%, the Middle East 6%, Italy 2%, UK 2%, the Benelux 2%, and others 1%.

Investment managers were allocated 32%, banks 27%, central banks and official institutions 22%, and insurance companies 19%.

Nordea Bank Finland, meanwhile, priced a Eu1.5bn five year issue at 7bp over mid-swaps yesterday after leads BNP Paribas, HSBC, Nordea and UniCredit built an order book of Eu2.25bn. That followed initial price thoughts and guidance of 8bp-10bp, with guidance subsequently revised to 8bp over plus/minus 1bp.

The issuer was the first to publicly announce a covered bond mandate in 2014, doing so on Thursday to book a slot and then proceeding to engage with investors on their maturity preference, with demand centring on five years, according to the lead syndicate official.

He said that Nordea paid a similar new issue concession to that on a DNB Boligkreditt benchmark in November, maybe slightly bigger, and that Nordea’s deal was a “good statement of strength” given competing SSA and higher yielding peripheral and other senior unsecured supply.

A syndicate banker away from the leads said Nordea achieved “a good price”, but mentioned that the spread was maybe 1bp-2bp wider than where syndicates were pitching levels in early December.

One hundred and thirteen accounts participated. Germany took 36%, the Nordics 19%, the UK and Ireland 17%, France 8%, Asia and the Middle East 6%, Switzerland and Austria 6%, the Benelux 4%, and other Europe 4%.

Banks were allocated 56%, central banks and official institutions 23%, fund managers 17%, and insurance companies and pension funds 4%.

Nordea enters a silent period today.