LF Hypotek sold a Eu500m seven year covered bond today (Tuesday) that attracted over Eu900m of orders while being priced flat to the issuer’s curve, benefitting from strong demand for non-CBPP3 supply. PKO and Hypo Noe could issue euro benchmarks in the latter half of March, having this morning announced roadshow mandates.

After announcing a mandate yesterday, Länsförsäkringar Hypotek (LF Hypotek) leads Commerzbank, NatWest, Nordea, SEB and UBS launched the Eu500m no-grow seven year issue with guidance of the 5bp over mid-swaps area this morning. The leads announced that orders had exceeded Eu700m after around one hour, before fixing the spread at 2bp with books over Eu900m.

“It’s a cracking trade, from our perspective,” said a syndicate banker at one of the leads. “Plus 5bp is certainly one of the more aggressive starts that we’ve seen recently in terms of IPTs, but this is a rare issuer coming to the market with a limited size and it’s the kind of deal investors are looking for, being from a core, non-CBPP3-eligible jurisdiction while offering a positive spread.

“It was a very smooth bookbuild, and the final, high quality book of over Eu900m allowed us to print flat to the issuer’s curve.”

The deal was deemed to offer little to no new issue premium, with LF Hypotek’s April 2022s seen at minus 2bp, mid, and April 2023s at around flat.

However, the new issue offered a pick-up versus recent Swedish supply, bankers said. The deal is the fourth benchmark covered bond to be issued out of Sweden this year, with the last a Eu500m seven year for Stadshypotek, which was priced at 1bp through mid-swaps on 14 February and seen trading around 2bp inside re-offer today.

“LF is a less frequent, smaller issuer, so that pick-up is fair,” said a syndicate banker.

LF Hypotek has issued one benchmark covered bond every year since 2013, with its last a Eu500m seven year in April 2016.

PKO Bank Hipoteczny announced a mandate this morning for a European investor roadshow ahead of a euro covered bond transaction, arranged by LBBW, PKO, Santander, Société Générale and UniCredit. The deal is expected to have an intermediate maturity.

The roadshow will commence next Tuesday and conclude on Friday of next week (14-17 March), and will visit the Benelux, France, Germany, Italy, Poland and the UK. A syndicate banker at one of the leads said the deal is likely to follow in the second half of March.

PKO Bank Hipoteczny, the specialist mortgage bank subsidiary of PKO Bank Polski, sold the first euro benchmark covered bond from Poland in October, a Eu500m short six year issue. The June 2022s were seen quoted at around the mid-20s, mid, today.

“But with this being the only Polish benchmark outstanding, it is not the most liquid bond, and there has not been much trading at that level,” said a syndicate banker at one of the leads.

Hypo Noe Gruppe Bank today announced that it has mandated Commerzbank, DekaBank, Erste, Nykredit and UniCredit to organise a two week European roadshow, commencing next week, ahead of a potential euro-denominated public sector covered bond issue, which will have a six or eight year maturity.

The deal would be Hypo Noe’s first benchmark covered bond since September 2014, when it sold a Eu500m seven year mortgage-backed issue.

Two benchmark Austrian covered bonds have been sold this year, a Eu750m 10 year mortgage issue for Erste on 10 January and a Eu500m 10 year public sector issue for Bawag PSK on 11 January.