SEB launched what is believed to be its first sterling covered bond today (Thursday), printing a £250m three year FRN that bankers said offered very attractive funding for the issuer compared with equivalent euro levels.

Leads Barclays and Deutsche priced the £250m (Eu353m, Skr3.29bn) three year FRN at 40bp over three month Libor. They announced the deal with IPTs of the 40bp area and maintained that level for guidance, on the back of books above £230m.

The last sterling benchmark covered bond came on 21 October, when Swedbank Hypotek priced a £350m three year FRN at 38bp over three month Libor.

A syndicate official away from the leads said the 40bp starting point for SEB’s deal was appropriate as it left room for performance, whereas Swedbank’s issue was seen as trading at re-offer.

“40bp feels fine,” he said. “They probably would have liked to have tightened it in further, but the price looks amazing compared to what they could have done in euros.”

Syndicate officials said the spread is equivalent to around 1bp through mid-swaps in euro.

One syndicate official said that the tightest SEB would have been able to come with an equivalent euro trade is 5bp, with 7bp-8bp being more likely, noting that a SpareBank 1 Boligkreditt Eu1.5bn three year was priced at 10bp on Thursday of last week (5 November).

“The sterling market is still there and a good option for some, though issuers may struggle to take the same sizes out of the market as we were seeing earlier in the year,” he added. “Some big buyers are still around, but there are some accounts now done for the year.”

The new issue is believed to be SEB’s first public sterling covered bond and third non-domestic deal of the year, following a Eu1bn seven year in June and a Eu1bn long seven year on 26 October.