Swedish Covered Bond Corporation (SCBC) yesterday (Monday) issued the first Swedish krona benchmark covered bond in the 10 year part of the curve, a Skr5bn long nine year issue, in response to growing demand, and further long-dated Swedish supply is deemed likely for ALM purposes.

Typically issuance in the domestic Swedish market only extends out to five years, but the deal came after SCBC and other Swedish issuers printed longer dated private placements in recent months.

“In the past six months we’ve seen increasing demand for longer private placements, anywhere from 10 to 20 years,” Louise Bergström, head of investor relations at SBAB (SCBC’s parent), told The CBR.

“We have seen this demand for extension also in the euro market, and we did a seven year euro transaction in January, but most of our funding comes from the domestic market, so it is good to have this maturity on our home turf.”

Whereas issuers in some jurisdictions are moving to lengthen their funding profiles in response to regulatory or rating agency pressures, Bergström said SBAB is extending maturities of its own volition.

“We did not make this decision from a legal perspective, and it’s not because of any regulatory enhancements,” she said. “It’s purely our own decision because we think this is a better ALM match.”

Following a roadshow last week, SCBC leads Danske, Handelsbanken, Nordea, SEB and Swedbank opened books for the June 2026 issue yesterday morning for an expected size of at least Skr3bn, ultimately printing a Skr5bn (Eu527m) deal on the back of orders approaching Skr6bn. The spread was fixed at 67bp over mid-swaps, at the tight end of initial guidance.

“We are very pleased, as we had good demand, got a very granular book, and priced at the lower end of the range,” said Bergström.

Syndicate bankers active in the domestic market said that other Swedish issuers had been watching SCBC’s deal with interest, and a banker at one of SCBC’s leads said further long dated benchmark issuance is likely.

“This result is a very strong confirmation of the demand and liquidity in the long end of the Swedish market,” he said. “Having seen issuers already tapping the long end with private placements, we had a good feeling about the demand, but I think this was a bigger success than any of us anticipated.

“Given the feeling we have that many other Swedish banks would like to extend their duration for ALM purposes, it is likely that we will see more issuance in this part of the curve. Of course, the issuers that have the possibility of issuing in euros will look at the relative value, but I think given the sizes you can actually get in the domestic market, it is likely that we will see more of these deals this year.”

The lead syndicate banker estimated that the Swedish krona deal offered a saving to SCBC compared with what it would have been able to achieve with an equivalent euro-denominated trade, noting that Swedish curves on average look 5bp-7bp cheaper than corresponding euro curves in four to seven years.

“It is quite difficult to set an exact number, because even in euros the market is not that liquid in 10 years,” he said. “But you get a bit more of a premium if you go a bit further out the curve.”