SR back on track in Eu750m return after investor work
SR-Boligkredit sold a Eu750m long five year issue today (Wednesday) that bankers described as its best deal to date after a lacklustre result for the Norwegian in January, with the new issue seen as having been boosted by a comprehensive roadshow.
The deal is SR-Boligkredit’s third euro benchmark covered bond overall and its second of the year, following a Eu500m seven year in January, which was priced in the middle of guidance and widened on the secondary market. The size of the seven year issue’s order book was not disclosed, and some bankers said the deal was not fully subscribed.
Following a European roadshow that was completed last week, SR-Boligkredit yesterday (Tuesday) announced a mandate for a September 2021 euro benchmark issue.
Leads Citi, Commerzbank, HSBC, LBBW and Nomura launched the deal with guidance of the 16bp over mid-swaps area this morning, before revising guidance to the 14bp area. The spread was then set at 12bp and the size at Eu750m, with the book closing at Eu2bn and including close to 100 accounts.
“It is quite a decent outcome overall and, being their largest deal so far with a good price, an extremely good result compared with their previous deal,” said a syndicate official at one of the leads.
Bankers suggested the issuer’s last deal had struggled because many investors were still unfamiliar with the SR-Boligkredit name – with the Norwegian issuer only having made its euro benchmark debut in September 2015 – and because the deal had not been preceded by a roadshow.
“They held a roadshow this time, which was apparently a very comprehensive, pan-European roadshow, and it looks like that helped,” said a syndicate official away from the leads. “Their second deal was a bit of a laggard after a good debut, but it looks like they realised their mistake and marketed this deal very well, and that’s reflected in the books.”
The lead syndicate official agreed.
“The good investor work paid off,” he said. “This deal is about building the issuer’s investor base, and it was successful in that end.”
Syndicate officials at and away from the leads said the deal offered a new issue premium of around 1bp, seeing the issuer’s inaugural September 2020s at 8bp, mid, and January 2023s at 15bp, although they noted that the 2023s had widened out of line with other comparables.
“The starting point looked relatively tight, but there’s not much competing Scandi supply on the horizon,” said a syndicate official away from the leads. “Most of the other Norwegian and Swedish issuers have done deals early in the year, so there is an element of rarity value to this trade.
“It’s a very good price for the issuer.”
The lead syndicate official added that the deal offered an attractive premium versus more established Norwegian issuers, seeing SpareBank 1 Boligkreditt September 2021s at 3bp, mid, but added that the new issue brought SR-Boligkredit’s curve closer to that of Sparebanken Vest, whose five year paper was seen trading in the high single-digits.
“In terms of the fundamental price there is still work to be done for SR-Boligkredit, but considering their own curve this is a good outcome,” he said.