An inaugural benchmark from Nordea’s new Finnish issuer today (Monday) achieved a spread deemed impressive for a quasi-debut, but a final order book of Eu1.5bn for the Eu1bn seven year covered bond was Eu500m short of an earlier update, which bankers said evinced substantial price sensitivity.

Nordea previously issued euro-denominated covered bonds through subsidiary Nordea Bank Finland, but earlier this year began establishing a distinct, specialist Finnish covered bond issuer, Nordea Mortgage Bank, to which it transferred all assets and liabilities relating to the former’s covered bond business. Following the completion of the demerger of Nordea Bank Finland on 1 October, Nordea Mortgage Bank last week held a European roadshow to introduce its newly established programme to investors ahead of the debut issue.

Leads Deutsche, HSBC, Natixis and Nordea launched the seven year issue with initial price thoughts of the mid-swaps minus 3bp area this morning, before setting guidance at the minus 6bp area on the back of orders in excess of Eu2bn, pre-reconciliation. The deal was then re-offered at minus 8bp and the size set at Eu1bn, with the final book over Eu1.5bn.

“Overall it’s a good result,” said a syndicate banker away from the leads. “They got Eu1bn at a very tight price, and although the IPTs were a touch defensive, they were able to tighten the spread significantly.

“Looking at the finishing point, it seems this strategy paid off, but the drop in the books tells you that there was clearly a high degree of price sensitivity. There may have been some accounts who felt that moving five basis points in this environment, even for a quality name, is too aggressive.”

The deal was seen as offering a new issue premium of around 3bp, with bankers citing Nordea Bank Finland October 2022s at minus 10bp, mid, and November 2024s at minus 12bp.

“It might be a new issuer but it’s a familiar name, and it looks like they haven’t had to pay up on account of this being a debut,” said a syndicate banker away from the leads. “The deal was well flagged and I’m sure they were well prepared, so that’s not a surprise.”

The deal is the tightest benchmark covered bond from Finland since March 2015, when Nordea Bank Finland priced a Eu1bn June 2020 issue at minus 10bp. Bankers said demand for the new issue was boosted by Nordea’s absence from the market, while the new issuer was being established, and by a lack of supply from other Finnish issuers this year.

Nordea Bank Finland sold its last benchmark covered bond, a Eu1.25bn 2022 issue, in October 2015. The new issue is only the second benchmark covered bond out of Finland this year, following a Eu1.25bn seven year for OP Mortgage Bank in May. This represents a substantial fall in volumes from recent years, with Finnish issuers having sold Eu6bn of euro benchmark covered bonds in 2014 and Eu7bn in 2015.

Sp Mortgage Bank, the newly established issuing entity of the Finnish Savings Banks Group, is expected to sell a debut benchmark later this month, after having announced a roadshow on Thursday.

Bankers said another Nordic issuer is monitoring the market with a view to launching a benchmark covered bond.