Nykredit Realkredit issued Skr11bn (Dkr8.6bn, Eu1.15bn) of January 2017 paper today (Tuesday) and an official at the Danish issuer said the sale had gone well considering wider market volatility, noting that the addition of an interest rate floor likely increased demand.

Nykredit sold the bonds to refinance a capital centre that includes Swedish krona-denominated mortgages, while the issuer’s ongoing Danish krone auctions are to conclude on Friday.

The Swedish sale came amid wider volatility, with the European and US markets rebounding today after falling dramatically yesterday on the back of a Chinese market crash.

“These are not the easiest waters to navigate when you have all this volatility going on around you,” said Morten Bækmand Nielsen, head of investor relations at Nykredit. “While fixed income markets haven’t been that affected, it does still weigh a bit on sentiment.

“So overall this went well, and we are happy.”

The long one year FRNs pay a coupon of 65bp over three month Stibor and were priced at a discount margin of 26bp, with the final order books around 50% oversubscribed.

Leads Danske, Nordea and Nykredit went out with initial price thoughts of the mid-to-high 20s, before revising to guidance of 28bp plus or minus 2bp on the back of IOIs in excess of Skr12bn.

A syndicate official at one of the leads cited as a positive that they were able to price deal at the tight end of guidance.

“That is a testament to the fact this trade has worked,” he said.

The lead syndicate official noted that the curve of Swedish covered bond issuer Stadshypotek, though based on fixed rate issuance, suggested that a comparable issue would trade at around plus 4bp-5bp, implying Nykredit’s issue offered a pick-up over domestic paper of the low 20s.

The paper offered a concession to compensate for the smaller issue size and likely lower liquidity, according to Nielsen.

“Also, we are still the new kid on the block, even though we have been doing this a while,” he said.

Nielsen noted the sale was the first time that Nykredit had issued in Swedish krona with a 0% coupon floor, and suggested the addition had helped the paper find demand.

“The last time we issued in Swedish kronor we didn’t have an interest rate floor and that raised quite a lot of questions with investors,” he said. “That is why we decided to address that upfront and put a floor on this bond – simply to get that question out of the way.

“Also, because interest rates are negative in Sweden we would be met with that objection straight away, so we thought it was better to comply with local customs.”

The deal was distributed roughly evenly to accounts in Sweden, Denmark, and other jurisdictions, Nielsen added.

“It’s a market where we issue something that is relatively small compared to the outstanding amounts of benchmarks issued by Swedish issuers, but I think we have built up a very decent and consistent investor base in these Swedish krona covered bonds that we issue,” he said.

“There was a lot of the usual suspects in there, and we were happy to see that.”