OP Mortgage Bank attracted Eu1.3bn of orders to a Eu1bn 10 year covered bond priced at 1bp over mid-swaps today (Tuesday), but some bankers questioned whether the Finnish issue could have been priced tighter to secondaries and through the flat threshold were it not for competing supply.

Leads Nomura, NordLB, OP and Société Générale launched the Eu1bn no-grow 10 year issue with guidance of the mid-swaps plus 3bp area this morning.

The spread was later fixed at 1bp, with the book closing at Eu1.3bn, including Eu90m of joint lead manager interest.

“It’s a solid outcome,” said a banker away from the leads. “The demand is perhaps a bit more modest than the last Finnish covereds and a bit less than they might have hoped – OP’s last Eu1bn, seven year got books of over Eu2bn – but this longer-dated deal is aimed at a smaller audience.”

The deal was deemed to have offered a new issue premium of 4bp-5bp, with bankers citing Nordea Mortgage Bank March 2027s at around minus 4bp, mid, and noting that the two issuers trade roughly in line in shorter maturities.

“It’s not a bad price, but I thought OP might have been able to go a little tighter,” said a syndicate banker away from the leads. “You wouldn’t normally expect them to have any problems in going through the flat to mid-swaps barrier.”

Another syndicate banker away from the deal suggested some demand may have been drawn away from OP’s new issue by competing supply, in the form of a Eu1bn 12 year issue for BPCE (see separate article) that was priced at 12bp over mid-swaps.

“It’s not necessarily comparing apples with apples, but the spread on OP’s deal doesn’t look quite so attractive next to the slightly longer one for BPCE,” he said.

Nevertheless, bankers said demand was supported by a relative lack of benchmark Finnish supply.

The new issue is OP’s second euro benchmark covered bond this year, following the Eu1bn seven year on 2 March. There has been only one other euro benchmark covered bond issued out of Finland in 2017, a Eu1.5bn five year for Nordea Mortgage Bank on 16 January.