Swedbank quickly followed up AT1 and senior unsecured deals with a Eu1bn seven year covered bond yesterday (Wednesday), the tightest post-crisis Nordic euro benchmark, and the issuer’s funding head said low funding costs mean there is little incentive to hold off.

The deal came on the same day that HSBC SFH issued a Eu1bn seven year deal and after NordLB CFB and Caja Rural de Navarra sold benchmarks on Monday and Tuesday, respectively, and ahead of an expected announcement this (Thursday) afternoon of details of the European Central Bank’s expanded asset purchase programme.

“We had a transaction in our funding plan for the first two quarters, and we decided yesterday (Tuesday) to go today,” Ulf Jakobsson, head of funding and liquidity at Swedbank, told The CBR. “We discussed internally if we should go before or after ECB and decided that we wanted to have this done and dusted before the ECB.

“If we would have decided to wait until after the ECB then mid-next week would have been the option.”

Swedbank Hypotek (Mortgage) achieved a re-offer spread of 5bp through mid-swaps on the back of a book of over Eu2.5bn for the Eu1bn (Skr9.25bn) deal. Leads BNP Paribas, Danske, LBBW, Swedbank and UBS had gone out with initial price thoughts of the flat to mid-swaps area, then set guidance at the 3bp through area after taking Eu1.7bn of indications of interest.

“We are very happy with the outcome of the transaction,” said Jakobsson. “We are not surprised. I thought we would be able to reach this level, but it was great to have that confirmed.”

Despite coming at an historically tight level, the seven year euro issue nevertheless still came around 5bp wider than where a theoretical domestic krona issue would come (with five years being the longest outstanding in krona), according to Jakobsson. However, he said that this was not a significant consideration.

“The euro market give us an opportunity to lengthen the duration of our outstanding covered bond stock, in addition to the investor diversification, and is strategically important for us,” he said, “so the premium to the domestic market is something that we are willing to pay.”

Germany and Austria were allocated 60%, the Nordics 17%, the UK and Ireland 9%, the Benelux 4%, Switzerland 4%, other 6%. Banks took 58%, central banks and official institutions 15%, funds 13%, insurance companies and pension funds 11%, and others 3%.

The benchmark comes after Swedbank sold a $750m (Skr6.23bn, Eu674m) inaugural Additional Tier 1 (AT1) deal on 12 February and a $1.4bn dual tranche senior unsecured transaction on Wednesday of last week (25 February).

“It’s nice to have these ticked off,” said Jakobsson. “The difference today compared to a couple of years ago – especially if one looks at senior, but also covered – is that when spreads were three, four, five times as wide, it was more expensive to prefund future funding needs. That is less of a consideration today and therefore we can be more opportunistic if we feel that market conditions are right.”

Jakobsson raised the possibility of Swedbank issuing a dollar covered bond in 2015.

“Our funding plan for this year is not that different from the last two or three years,” he said, “and a US dollar covered together with a euro senior are transactions we would like to do during the remainder of 2015.”