LF Hypotek sold a Eu500m seven year issue today (Thursday) at the tight end of its pricing expectations, while Caffil printed a Eu1bn eight year deal just 1bp wider than a one year shorter La Banque Postale deal on Tuesday that was the tightest ever non-German benchmark covered bond.

Länsförsäkringar Hypotek leads Commerzbank, Danske, JP Morgan and Natixis launched the Swedish issuer’s Eu500m no-grow seven year deal with initial price thoughts of the flat to mid-swaps area. With IOIs over Eu1bn, the guidance was initially set at the minus 2bp area, before being revised to minus 3bp +/-1bp. The re-offer was then set at minus 4bp on the back of Eu1.3bn of orders.

“It went very well indeed,” said a syndicate official at one of the leads, noting that the final price had been at the very tight end of the issuer’s expectations.

“What we have here is a less frequent, well appreciated issuer, and this is a good result for them.”

Seeing LF Hypotek May 2020 paper at 7bp through mid-swaps, mid, pre-announcement, and March 2021s at 6.75bp through, the lead syndicate official saw fair value for the new issue as being around 6bp. A syndicate official away from the leads agreed.

“It is only a slim new issue premium, but that fits with the market conditions,” he said.

Noting that the basis swap between Swedish kronor and euros is supportive, the lead syndicate official said it was a good time for LF Hypotek to return to the euro market, but added that the priority for the issuer was to maintain its presence and reach investors it would not necessarily be able to in its domestic currency.

To do so, the issuer typically returned to the euro market at around the same time each year, he noted. LF Hypotek’s May 2020 and March 2021 outstandings, both also Eu500m seven year deals, were sold in April 2013 and March 2014, respectively.

A syndicate official away from the leads said he expects more Nordic issuers to launch euro deals after leaving their blackout periods, as arbitrage in euros is currently favourable for issuance.

“This one looks a really nice trade,” he added.

France’s Caffil priced its Eu1bn eight year trade at 11bp through mid-swaps, 1bp tighter than where fellow French issuer La Banque Postale on Tuesday sold a seven year Eu500m issue – the tightest ever priced non-German benchmark covered bond.

Caffil leads Commerzbank, Crédit Agricole, Deutsche, SG and UniCredit went out with initial price thoughts of the minus 7bp area, then moved to guidance of the minus 9bp area after the leads gathered IOIs of over Eu1.6bn.

“It is a very strong success,” said a syndicate official away from the leads.

He noted that, taking into account the longer maturity, the deal had effectively printed at the same level as La Banque Postale’s, while offering a new issue premium of 1bp-1.5bp.

Another banker away from the deal agreed.

“This was well set next to La Banque Postale,” he said.

Meanwhile, bankers said that a supportive market should see primary market activity continue at a similar pace next week.

“It has been a good week for covereds,” said one. “The credit market is in pretty bad shape today and if these conditions persist then you should see a preference for covereds next week.

“I’d expect normal service, with supply of around Eu5bn per week, to resume.”