Swedish Covered Bond Corporation (SCBC) sold its first straight 10 year benchmark covered bond today (Tuesday), accessing a part of the curve rarely tapped by Swedes to print a Eu750m issue that attracted over Eu1bn of orders, and offered a substantial saving versus the domestic market.

The new issue is SCBC’s longest dated euro benchmark, and such long dated Swedish paper remains rare. Issuers from the country have preferred the five to seven year part of the curve, which better matches their assets, and it was only last month that the large domestic Swedish krona market extended out towards 10 years when SCBC sold a Skr5bn (Eu527m) long nine year.

Following a mandate announcement yesterday (Monday) afternoon, SCBC leads Commerzbank, Credit Suisse, Danske, NordLB and SG launched the 10 year euro issue this morning with guidance of the 6bp over mid-swaps area. The spread was later set at 3bp on the back of books over Eu1bn, before the size was set at Eu750m (Skr7.11bn).

“It’s the longest benchmark bond out there for a Swedish issuer, so it’s clearly a bit of a unique product and a very interesting deal,” said a syndicate banker at one of the leads. “It’s a Swedish name that hasn’t got the same following as a Handelsbanken, for example, but for them to still get over Eu1bn of orders to a successful Eu750m 10 year with such a slim new issue premium is an excellent result.”

Bankers said the deal offered a new issue premium of 2bp-3bp, seeing SCBC June 2022s at minus 9.5bp, its February 2024s – the issuer’s longest dated outstanding – at minus 6bp, mid, and Stadshypotek October 2026s – the longest dated Swedish benchmark outstanding in the euro market – at minus 1bp.

“Looking especially at the premium, which is quite marginal for a long-dated issue like this, it was a very strong transaction for SCBC today,” said a banker away from the deal.

The Stadshypotek October 2026 is a Eu500m 10 year issue from September that is viewed as distinct because it is backed by Finnish collateral. It is, however, the only euro benchmark Swedish covered bond with a maturity of 10 years or longer to have been sold since 2011.

When SCBC on 13 February issued the first Swedish krona benchmark covered bond in the 10 year part of the curve, it said it was seeking to lengthen its funding profile for ALM purposes and in response to growing investor demand at the long end.

That June 2026 issue was priced at 67bp over mid-swaps, and quoted at 65bp, bid, today, according to syndicate bankers active in the Swedish market. They estimated that the 3bp spread of today’s euro was equivalent to a spread of three month Stibor plus 50bp, suggesting that the deal offered a saving of around 15bp compared with what SCBC would have been able to achieve in its domestic market.

“There is a big arbitrage for Swedish banks to issue in Europe, but that is not surprising, as we have had that arbitrage for some time,” said a syndicate banker who worked on SCBC’s recent Swedish krona trade.

SCBC had already sold one euro benchmark covered bond this year, a Eu1bn seven year on 9 January. The last Swedish euro benchmark was a Eu500m seven year for Länsförsäkringar Hypotek on 7 March at 2bp over.

Norway’s DNB Boligkreditt is in the market today with a five year US dollar benchmark covered bond. Leads Citi, HSBC, RBC and Toronto-Dominion launched the 144A fixed rate five year issue with initial price thoughts of the 55bp over mid-swaps area this morning. The deal is expected to be priced after the New York open today.

It is the first benchmark US dollar covered bond from a Nordic issuer since 20 May 2015, when DNB sold a $1.25bn (Nkr10.6bn, Eu1.16bn) six year issue.