Swedish Covered Bond Corporation (SCBC) is set to launch the first domestic benchmark in the 10 year part of the Swedish krona market next week after a roadshow that started on Wednesday, as the SBAB subsidiary focuses on extending its maturity profile further.

SCBC has mandated Danske, Handelsbanken, Nordea, SEB and Swedbank to launch the landmark transaction via syndication. The transaction is expected to be for at least Skr3bn (Eu317m), will pay a 2% coupon and have a 17 June 2026 maturity date.

Issuance in the domestic Swedish krona covered bond market typically only extends out to the five year part of the curve and, according to several market participants, the new benchmark will be the first in the 10 year part of the curve. Swedish issuers have tended to sell longer dated covered bonds in euros, but rarely as long as 10 years – the last was a Eu500m deal for Stadshypotek in October, although that was backed by Finnish collateral and the last backed by Swedish residential mortgages was a Eu1.25bn issue for SEB back in March 2011. Charlotte Asgermyr, chief covered bond and FI market strategist at SEB noted, however, that SCBC and LF Hypotek, for example, placed almost Skr1bn of 10 year paper as private placements in mid-January.

Noting a trend for longer duration in the Swedish krona market, SCBC in a presentation cites several factors in relation to the 10 year benchmark (SCBC147), including: an improved asset-liability profile; investor interest in long-dated issuance; and Swedish krona funding being of a shorter duration than euro funding.

The new issue will meet the characteristics of the domestic benchmark market, including benefiting from a market-making agreement and with tap issuance after the initial sale.

SCBC reported its results on Wednesday.

The issuer was not able to respond to enquiries before The CBR’s deadline.