Swedbank is set to launch the first benchmark covered bond of the month, having today (Tuesday) announced plans for a seven year deal, after FIG issuers have so far this week focussed on senior and capital deals. CCDQ has announced a non-deal roadshow.

Danske, Natixis, RBS, Swedbank and UniCredit have the mandate for Swedbank Mortgage’s deal, which will be its first euro benchmark covered bond since April 2013, when it sold a Eu1bn seven year at 13bp over mid-swaps.

Swedish euro supply has been limited this year in general, with only two deals launched so far, Eu500m seven year and Eu1.25bn five year issues for LF Hypotek and Stadshypotek, respectively, in March.

However, syndicate bankers have for some time been mentioning Scandinavian banks as new issuance candidates in covered bonds once they emerge from blackouts, with euro levels also said to be attractive versus Swedish kronor.

A syndicate official on the Swedbank mandate said that the deal is planned for launch tomorrow (Wednesday). The issuer has a May 2020 issue trading at around 2.5bp over, he said, with a Nordea February 2021, SEB April 2021 and a Stadshypotek October 2020 also serving as comparables and each trading at 7bp over.

Canada’s Caisse centrale Desjardins du Québec (CCDQ) today announced that it has mandated Barclays, Crédit Agricole and DZ Bank to organise a non-deal related roadshow for the first week of June. (See below for more.)

A deal from Swedbank would be the first benchmark covered bond since 29 April, when Compagnie de Financement Foncier and Bank of Montreal priced new issues, with public holidays and blackouts having combined to limit supply in recent weeks.

Covered bond syndicate bankers this morning said they would have expected more primary market activity in covered bonds this week given strong market conditions – “bullish”, in the words of one – but FIG issuers have so far been taking advantage of these to tap the senior unsecured and hybrid capital markets.

However, one said that “a few guys are close to pulling the trigger”.

“The market is definitely there, but some banks are more focused on getting strategic deals done coming out of blackout,” he said, adding that senior unsecured spreads have rallied strongly over the past two to three weeks and raising funding via that asset class makes more sense for opportunistic transactions.

“I was hoping it would be busier,” he said of the covered bond market.

He said that a recent Swedbank five year unsecured deal has tightened by around 25bp to reach 27bp (after pricing at 52bp over), and that Nordea and SEB senior unsecured transactions tightened by some 10bp-15bp.

“The rally was largely technical because of a lack of supply, but spreads are really squeezed,” said the syndicate official.

After a Eu1.5bn dual tranche senior unsecured transaction for BNP Paribas and a Eu500m 12 NC7 Tier 2 for Danske Bank yesterday (Monday), today’s FIG supply involves senior unsecured transactions from Crédit Agricole, Jefferies, Sparebank 1 SMN, Rabobank and Veneto Banca, and a Tier 2 transaction for Spain’s Bankia.

CCDQ’s roadshow is set to commence on 2 June and is intended to provide an update of the issuer’s credit and its legislative residential mortgage covered bond programme, according to a syndicate official at one of the leads, who added that there is no intention from the issuer to immediately follow up with a deal.

“There is, however, the option for the issuer to return to market again this year,” said the syndicate official. “But whether this will be covered or senior is not yet cast in stone, and I am convinced that any deal that does follow will come after the summer.”

CCDQ priced its first euro and legislative benchmark covered bond in February, a Eu1bn five year at 15bp over mid-swaps. There was no official roadshow in the lead-up to that deal.

“The issuer is constantly on the road, it would just not normally announce it officially,” said the syndicate official.

Toronto-Dominion Bank is the last of Canada’s legacy covered bond issuers yet to have a programme approved by the administrator of the legal covered bond regime, Canada Mortgage & Housing Corp, although this is expected to be forthcoming soon.