Stadshypotek achieved its target of diversifying its investor base with a $1.25bn five year covered bond yesterday (Wednesday), as North American accounts took two-thirds. The 144A issue attracted around $2.8bn of orders despite being priced flat to secondaries, and was deemed proof the market is open to a wide range of names after a DNB issue last week.

The Swedish issuer’s deal comes after DNB Boligkreditt on Tuesday of last week (21 March) sold a $1.5bn five year that was the first US dollar benchmark from the Nordics since May 2015.

Stadshypotek leads Citi, HSBC, RBC and Toronto-Dominion launched the five year 144A/Reg S issue with initial price thoughts of the low 50s over mid-swaps area after the European open yesterday morning. The leads announced before the US open that they had taken more than $1.7bn of orders.

After the US open, guidance was set at 48bp the number, before the deal was re-offered at 48bp and the size set at $1.25bn (Eu1.16bn, Skr11.1bn). The book peaked at $3.1bn and closed at around $2.8bn.

Accounts in North America were allocated 67% the deal, the UK and Ireland 12%, Germany and Austria 11%, the Nordics 5%, Asia 2%, and other Europe 3%. Banks bought 49%, central banks and official institutions 26%, fund managers 22% and insurance companies and pension funds 3%.

“It’s a great result for the issuer in terms of getting differentiated investor base versus their euro or Swedish krona issuance, which was their primary objective,” said a banker at one of the leads. “We ended up with very few investors dropping out despite that fairly aggressive move in the price and despite the deal coming flat to secondaries.

“The issuer therefore upsize the deal from an anticipated size of Eu1bn to better service that demand.”

Bankers said the deal offered little to no new issue premium, seeing DNB Boligkreditt’s recent March 2022s at 48bp, bid. The Norwegian issuer’s $1.5bn five year 144A covered bond was priced at 50bp over mid-swaps on the back of $2.9bn of orders last week.

The lead banker added that the new US dollar issue was slightly more expensive for Stadshypotek than an equivalent euro-denominated issue would have been.

“But more importantly it was inside what they would have been able to achieve in the Swedish krona market, which was their main comparable when thinking about the value in the transaction,” he said.

Stadshypotek’s last benchmark US dollar covered bond was in April 2015, when it sold a $1bn five year 144A issue. The Svenska Handelsbanken subsidiary had sold one euro benchmark this year, a Eu500m seven year on 14 February.

“Overall, it’s great to see the dollar market opening up once again and with a bit more variety, after quite a long hiatus for Nordic issuers,” added a syndicate banker. “Given the strong demand for both deals, I think there is a good chance we’ll see some more activity in the dollar space over the coming weeks.”