Swedbank Hypotek dispensed with the 144A format for a US dollar denominated five year Reg S issue today (Wednesday) after having used the US documentation on previous dollar issuance, with a syndicate official at one of the leads citing good demand for similar Eurodollar trades.

Leads Citi, Credit Suisse, HSBC, RBC and Swedbank launched the five year Reg S deal with initial price thoughts of the 40bp over mid-swaps area. Guidance was then set at 38bp over, plus or minus 1bp, on the back of over $1bn (Eu897m, Skr8.37bn) of orders. The deal’s size and re-offer spread had not yet been fixed as The CBR went to press.

Swedbank’s last US dollar benchmark covered bond was a $1bn five year priced at 46bp over mid-swaps in March 2013. On that occasion and in 2011 and 2012 it issued in 144A format. The last update to Swedbank’s US covered bond programme listed on the investor relations pages of its website was in February 2013.

The most recent 144A dollar benchmark was a $750m three year deal launched on 14 April by National Bank of Canada, and on the same day BayernLB sold a $500m three year Reg S Eurobond.

While other Canadian banks have also used the US-targeting 144A format and Stadshypotek did so with a $1bn five year on 1 April, BayernLB was following in the footsteps of Aareal Bank and LBBW, which on 12 March reopened the Eurodollar segment after a long hiatus with a $500m four year Reg S issue that it soon increased by $250m.

“There’s been a few Reg S trades recently, for which we saw good demand,” said a syndicate official at one of Swedbank’s leads.

“Rather than do all the laborious documentation you need to get through for 144A, we decided there is sufficient liquidity in Reg S to do a successful Reg S-only trade.”

Bankers have offered differing opinions on the renaissance of the Reg S market, with some saying there is regular demand from bank treasuries and others if the pricing is appropriate, but others being more sceptical.

“I have no conviction about the depth of the Eurodollar sector,” said one. “It’s a little bitty.”

Stadshypotek’s decision differs somewhat from the German issuers’ since they were matching US dollar-denominated assets with their issuance, whereas Stadshypotek is not, so its cost calculations would be different.

“For the issuer, this looks attractive to what they could have done in euros,” suggested a syndicate official away from the leads.