Finland’s Sp Mortgage Bank is set to issue a debut benchmark covered bond towards the end of the month after a roadshow for a euro issue with an intermediate maturity to be launched through a newly established Eu3bn programme.

Sp Mortgage Bank this (Thursday) morning announced the mandate for the European roadshow, with leads BNP Paribas (the sole arranger of the covered bond programme), LBBW and Nordea.

The deal is backed by 100% Finnish residential mortgages, is expected to be rated AAA by Standard & Poor’s, and will be Covered Bond Label-compliant.

Kai Brander, board member at Sp Mortgage Bank, told The CBR that the deal will probably be launched toward the end of November

“We are planning to hold the roadshow fairly soon in order to be able to execute the deal around end of the month,” he said.

Sp Mortgage Bank is the recently established covered bond funding vehicle of the Finnish Savings Banks Group. The group’s 23 member savings banks (Säästöpankki), Sp Mortgage Bank, parallel entity Sp Central Bank and their central institution Union Cooperative operate as a single entity for regulatory purposes.

The mortgage bank began operations in March, after which the group has been transferring assets to the new entity and finalising its newly established Eu3bn covered bond programme.

“We want to issue covered bonds because they are a very natural source of funding for this group,” added Brander. “If you look at the lending business, the biggest part of it is mortgage lending.

“Some 72% of our lending goes to private clients, and almost all of that is mortgage lending.”

The Finnish Savings Banks previously raised wholesale funding via Aktia Real Estate Mortgage Bank covered bond issuance. When Aktia in 2012 switched to direct issuance and the joint issuance arrangement ceased, the group’s wholesale funding channels were closed, until Sp Central Bank established an EMTN programme in 2015.

Sp Central Bank sold a debut senior unsecured bond, a Eu500m five year, in April of last year, and has since issued further sub-benchmark and privately placed trades.

Only one benchmark covered bond has been sold out of Finland this year, a Eu1.25bn seven year for OP Mortgage Bank in May, and the only other public issuance has been a Eu250m five year debut for the Mortgage Society of Finland in May and a Eu250m seven year for Ålandsbanken on 22 September.

Nordea is expected to launch its first benchmark covered bond from a new Finnish entity – Nordea Mortgage Bank – next week, with the issuer currently on the road ahead of a potential euro-denominated issue with an intermediate to long maturity.