LF Hypotek priced the first euro benchmark of the year from a Swedish issuer on Tuesday, a Eu500m seven year, on the back of almost two-and-a-half-times oversubscription, with an official at the issuer noting that it had taken advantage of “very attractive” cross-currency swaps.

Syndicate officials described the market on Tuesday as “crowded”, with Bank of Ireland Mortgage Bank and CaixaBank also pricing euro benchmarks that day. Despite the competition, LF Hypotek leads BNP Paribas, Nordea, RBS and UniCredit built an order book of more than Eu1.3bn for a Eu500m no-grow seven year deal. They priced it at 16bp over mid-swaps, the tight end of guidance of the 18bp over area that followed initial price thoughts of 18bp-20bp over.

Martin Rydin, head of treasury and executive vice president at Länsförsäkringar Hypotek, said the issuer was very pleased with the outcome.

“Swapped back into Swedish kronor, the all-in level is much better than the level we could achieve in the domestic market, in the ballpark of roughly 6bp-7bp better than the domestic market,” he said.

Finland’s OP Mortgage Bank issued its first deal in nearly two years on Monday, a Eu1bn seven year priced at 14bp over, and Rydin said that the reception enjoyed by that deal had been a factor in LF Hypotek’s decision to issue. LF Hypotek’s deal was somewhat “opportunistic”, he said, but added that the bank had always intended to issue one benchmark in 2014, and that it had been targeting the first half of the year.

“After the outcome of the OP Mortgage Bank deal, we recognised that the market was strong and investor demand for core covered bonds was there,” he said. “In addition, the cross-currency swap into Swedish kronor is also very attractive at the moment, which left us feeling now was the time to take advantage and pull the trigger.”

The seven year maturity made economic sense for the issuer given that the curve from five to seven years is not very steep, added Rydin.

“We had two options, five years or seven years, and seven offered better relative value in comparison with the domestic market and there is also currently solid investor demand in that part of the curve,” he said.

LF Hypotek for now does not intend to tap the euro benchmark covered bond market again this year, according to Rydin, and will instead potentially consider its options in the euro senior unsecured market at a later stage.

“We are intending to be a regular covered bond issuer but what you can expect from us is one euro benchmark a year,” he said. “This takes us out of the euro market for this year.

“At some point in time we [LF Bank] will establish ourselves in the euro benchmark senior unsecured market, but we’ve yet to decide when this will be.”

Germany took 44.5% of LF Hypotek’s issue, the Nordics 22.4%, the UK and Ireland 8.7%, the Benelux 8.3%, Austria 6.4%, Switzerland 4.4%, France 4%, and others 1.3%.

Banks were allocated 47.9%, funds 29.8%, central banks and public institutions 10.1%, insurance companies 10%, and private banks 2.2%.