Eika Boligkreditt sold a marginally oversubscribed Eu500m six year issue today (Wednesday), and bankers suggested a relatively slim premium reduced demand after heavy supply this week, but said 22bp spread was a good result for the issuer. CCDQ has meanwhile announced a roadshow.

Eika Boligkreditt’s deal, its first euro benchmark of the year, has been anticipated since the Norwegian issuer held a European investor roadshow that ended on Tuesday of last week (13 October).

Leads Deutsche, Natixis, Nordea and UniCredit launched the Eu500m no-grow six year issue with initial price thoughts of the low 20s over mid-swaps area, before moving to guidance of the 22bp area with orders approaching Eu500m. The spread was then fixed at 22bp with the book above Eu500m.

Syndicate officials away from the leads said fair value for the new issue was 14bp-15bp over based on Eika’s secondary curve, seeing its March 2021s at 13bp, mid, and noting that recent five year issues from Norwegian issuers were quoted at around the low double-digits.

They said Eika’s new issue premium is therefore fairly low compared with those offered recently by DNB Boligkreditt and other Nordic names, who were seen as paying up closer to 10bp, and suggested this was partially why the new issue was less oversubscribed than some of this week’s earlier deals.

“Their approach looks ambitious, especially when you consider Eika trades a bit back of the tier one Norwegian names,” said one syndicate official away from the leads. “They have clearly got their deal done at a decent level, which is a good thing, but when there has already been Eu6bn of supply this week, and when you’re selling a deal that is not quite as attractive as recent issues, you have to expect lower demand.

“If you are an investor that has gotten used to 10bp premiums, this is not a deal that will make you scream hooray.”

Another syndicate official away from the leads agreed the pricing was a touch more aggressive than in recent deals.

“But it’s not such a risk when you consider that this is a Eu500m no-grow, which will obviously help,” he said. “And you would assume that they got good feedback on the road and so can be confident in going out at this level.

“In the end, it’s a done deal at a good spread for the issuer, in what is a slightly tricky market.”

Eika’s last euro benchmark was a Eu500m March 2021 issue in March 2014.

Syndicate officials said meanwhile that euro benchmark issuance could continue to slow in anticipation of an ECB meeting tomorrow (Thursday), but said that some issuers may still attempt to tap the market ahead of the conclusion of an FOMC meeting next Wednesday.

They added, however, that the relatively low levels of demand for Eika’s deal may convince some to hold off on launching new deals until next week at the earliest.

“When you see that there has been Eu6.5bn of euro supply in three days you might think that looks like a bullish market scenario, but it is not,” said one syndicate official. “The market is constructive, but it is not overwhelmingly good.”

Caisse Centrale Desjardins du Quebec this morning announced it will hold a series of investor meetings across the UK and Europe on 2-10 November. A euro-denominated covered bond transaction is expected to follow, subject to market conditions. Barclays, DZ, Natixis and RBS have the mandate.