LF Hypotek sold a Sfr150m (Eu124m, Skr1.14bn) 10 year issue on Tuesday that was the first new covered bond in the Swiss franc foreign market since January, according to a lead syndicate official, with the issuer’s head of treasury attributing the timing to an attractive cross-currency swap.

Credit Suisse launched the deal on Tuesday, with a syndicate official at the bank saying that the summer holiday season for the country was over at the weekend. The bank opened books late morning for a Sfr100m minimum deal with guidance of 3bp through mid-swaps, and was able to price a Sfr150m transaction, the upper end of the issuer’s target range, at 3.5bp through mid-swaps on the back of good demand.

Länsförsäkringar (LF) Hypotek has launched several Swiss franc issues and the syndicate official said that the new deal was priced with no new issue premium versus an outstanding 2023 issue, which he noted is illiquid and trading at a high premium given that it has a 1.125% coupon, compared with 0.875% on the new deal.

According to the syndicate official, the last Swiss franc covered bond supply in the foreign market was in January, with a Sfr225m seven-and-a-half year deal for Crédit Agricole Home Loan SFH having hit the market on 24 January.

LF Hypotek has a Sfr150m floating rate note, launched in 2011, maturing next month around the time of the new issue’s payment date, but Martin Rydin, head of treasury at LF Hypotek, said that the timing of the new issue was unrelated to this.

“We take a somewhat opportunistic approach to the Swiss franc market,” he said. “This is driven of course by investor demand and the re-offer level, but also it is a question of the swap from Swissies into euros and into Swedish kronor – sometimes this works, and sometimes not.

“It looked good now and so it was interesting for us to do something.”

Rydin noted that the level achieved is not easily comparable with the Swedish market, given that domestic issuance tends to be confined to up to five or sometimes seven year maturities – with the duration available in Swiss francs therefore attractive – but he said that the level was roughly in line with euros.

“But euros was never an alternative because we would need to do much more volume for a benchmark and we have only limited funding needs,” he added. “We have done our yearly euro benchmark already.”

LF Hypotek issued a Eu500m seven year benchmark in March at 16bp over mid-swaps.

“The Swiss franc market is one that we find interesting,” added Rydin. “The deal sizes suit our funding needs, it provides diversification, and we can get longer duration at good levels.”

He said that while the issuer did not hold any specific marketing exercise ahead of the latest issue, it is already established in the Swiss franc market given its outstanding issuance and does ongoing investor relations work in the country.