Swedbank attracted some Eu2bn of orders to a Eu1bn seven year covered bond today (Wednesday) that was priced at a historically tight spread of minus 6bp. Hopes are high for further supply, with market conditions highly conducive after the first round of the French presidential election.

Swedbank leads BNP Paribas, Danske, DekaBank, Deutsche, LBBW and Swedbank launched the seven year issue with guidance of the mid-swaps minus 2bp area this morning, before revising guidance to the minus 5bp area plus or minus 1bp on the back of books approaching Eu2bn. The spread was then set at minus 6bp and the size at Eu1bn.

“It’s a smooth, well run trade that has landed exactly where I would have put a new Swedbank seven year,” said a banker away from the deal. “The Eu2bn books looks especially impressive when you remember that of course Swedbank do not have the support of the ECB purchase programme.”

The deal is understood to be the tightest post-crisis euro benchmark from Sweden.

It was deemed to have offered a new issue premium of around 1bp-2bp, with bankers citing Stadshypotek February 2027s at minus 6bp, bid, and noting that Swedbank tends to trade slightly inside Stadshypotek.

“Swedbank have no reference points this far out the curve, but looking at the others’ curves, it is a punchy price,” said a banker away from the deal.

The new issue is Swedbank’s second euro benchmark covered bond this year, following a Eu1bn five year on 9 January, and extends Swedbank’s curve by two years.

Syndicate bankers said other issuers are monitoring the market, some having exited blackout periods, and are optimistic about the prospects of further euro benchmark supply tomorrow (Thursday), given the extremely supportive conditions in the wake of the first round of the French elections.