Nordea scored the covered bond market’s “most convincing result” of recent days with a Eu1.5bn five year issue that drew over Eu2.4bn of demand today (Monday), with bankers attributing its success in part to its shorter maturity, while an Eu500m eight year for La Banque Postale also impressed.

Euro covered bond issuance resumed at a brisk pace this morning after a brief pause at the end of last week – with the last benchmark a Eu500m 10 year covered bond for Bawag PSK on Wednesday – during which market participants had mulled a slight dip in demand compared with the more emphatic first week of supply.

This morning Nordea Mortgage Bank leads Credit Suisse, LBBW, Nordea and Société Générale launched the Finnish five year issue at 9:00 CET with guidance of the 1bp through mid-swaps area. After an hour the leads announced they had taken over Eu1.5bn of orders, before the spread was at 11:10 set at minus 4bp with books “well in excess” of Eu2bn. The size was later set at Eu1.5bn, with the book above Eu2.4bn.

“We are very pleased with this result, offering just 2bp concession on a Eu1.5bn trade, on the back of really good oversubscription and a high quality order book,” said a syndicate banker at one of the leads. “You need the right maturity, the right credit and the right spread, and I think this deal ticked every box.

“In the last couple of weeks there has been a clear bias from accounts towards deals in the shorter maturities, with those deals getting more demand and better spread movements towards fair value. I think Nordea benefitted from that trend in particular.”

Bankers away from the leads were similarly positive about the outcome.

“This is the most convincing result of recent days,” said a banker away from the leads. “Being one of the leading names in the Nordics, Nordea is as close as you can get to an assured win in the covered bond market, always offering a good mix of price and size, and so it proved today.”

Bankers said the deal offered a new issue premium of around 2bp, seeing Nordea Bank Finland’s February 2021s and October 2022s and Nordea Mortgage Bank’s November 2023s all quoted at minus 6bp, mid.

The new issue is Nordea Mortgage Bank’s second benchmark covered bond, following a Eu1bn seven year issue on 14 November. Nordea had previously issued euro-denominated covered bonds through subsidiary Nordea Bank Finland, but last year established Nordea Mortgage Bank as a distinct, specialist Finnish issuer, to which it transferred all assets and liabilities relating to the former’s covered bond business.

The deal is the first benchmark Finnish covered bond this year, with the last a Eu500m five year debut for Sp Mortgage Bank on 22 November.

La Banque Postale leads ABN Amro, JP Morgan, Natixis, NordLB and UniCredit launched the French issuer’s Eu500m no-grow eight year issue with guidance of the 1bp over mid-swaps area. Guidance was then revised to minus 1bp plus or minus 1bp will price within range on the back of Eu800m of orders, before the spread was set at minus 2bp with the books at Eu900m.

“It is a very decent trade,” said a banker away from the leads. “The book was smaller than Nordea’s, perhaps due in part to the longer maturity, but they were able to move the spread well and break through that mid-swaps barrier, which is always difficult.”

Another banker away from the leads described the deal as “textbook”.

“With the size fixed at Eu500m and with the Eurosystem presumably placing its usual bid, they clearly had no problems placing that size at quite a punchy price,” he said.

The deal was deemed to have offered a new issue premium of around 1bp, with bankers citing La Banque Postale’s January 2024s at minus 4bp, bid.

Bankers noted that the deal had been priced 1bp wider than a Eu750m seven year issue for Société Générale, which was priced at 3bp through mid-swaps on Wednesday and was the last French benchmark.

“That seems about fair,” said one. “You can argue that La Banque Postale is the rarer and better quality issuer, but SG’s deal was one year shorter, perhaps justifying that differential.”

The new issue is La Banque Postale’s first benchmark covered bond since January 2016, when it sold a Eu500m seven year. The French issuer has sold just one benchmark covered bond in each of the last four years.