Finland’s OP Mortgage Bank sold a “blowout” Eu1.25bn seven year issue today (Tuesday), capitalising on a strong market to attract Eu3bn of orders, after The Mortgage Society of Finland yesterday received over Eu850m of demand for a Eu250m five year covered bond debut.

OP’s new issue is the first benchmark Finnish covered bond of the year, with the last such issuance from the country having been in November, when OP and Danske Bank Finland sold five year issues.

Leads Barclays, JP Morgan, OP and Société Générale this morning priced the new Eu1.25bn seven year issue at 4bp over mid-swaps, after having launched the deal with guidance of the 8bp area and revised guidance to the 6bp area. The book closed at Eu3bn, pre-reconciliation.

“It’s a complete blowout,” said a syndicate official away from the leads. “It’s awesome – it’s the right deal at the right time in the right maturity – and based on that book, they could have printed even more.

“It’s a very strong market and OP capitalised on that.”

Some syndicate officials away from the leads said the deal had been priced through the bid side of the issuer’s curve, seeing OP November 2020s at flat, bid, and September 2022s at 3bp and estimating that fair value for the new issue was 5bp-6bp.

Others, however, saw OP seven year paper at around 4bp, bid, and estimated that fair value for the new issue was 2bp, based on the mid side of OP’s curve.

“Whichever way you look at it, it’s an impressive price that people were clearly willing to buy into,” added a banker.

The Mortgage Society of Finland (Suomen Hypoteekkiyhdistys, or Hypo) yesterday sold its first covered bond, a Eu250m five year.

Leads Danske, LBBW, Nordea and Swedbank launched the deal with initial price thoughts of the 27bp over mid-swaps area, before setting guidance at the 25bp area on the back of IOIs above Eu400m. The spread was then fixed at 22bp, with the books above Eu750m. The book closed at over Eu850m with 41 accounts.

“This is a very good book, especially given that this is a new, unfamiliar issuer,” said a syndicate official at one of the leads. “But it is a clear buy.

“Investors like Finland, and apparently they like this name.”

The lead syndicate official said that a highlight of the deal is that a large share was allocated to non-domestic accounts.

Accounts in the Nordics were allocated 57% of the deal, Germany and Austria 20%, the Benelux 6%, southern Europe 5%, and Asia 2%. Central banks and official institutions bought 35%, banks 29%, pension funds and insurance companies 29%, and asset managers 7%.