The Mortgage Society of Finland (Hypo) sold its second Eu250m covered bond yesterday (Tuesday), a seven year transaction in which it increased international participation by 10% percentage points over its debut.

Hypo (Suomen Hypoteekkiyhdistys) launched its first covered bond, a Eu250m five year, in May 2016.

Its new issue followed a European roadshow that ran from Monday to Friday of last week, after a mandate specifying a Eu250m seven year deal was announced on 7 June.

Leads BNP Paribas and Swedbank went out with initial guidance of the mid-swaps plus 12bp area yesterday morning, before revising guidance to 10bp, plus or minus 1bp, then pricing the deal at 9bp over on the back of more than Eu400m of demand.

A syndicate banker at the leads said the process was relatively quick and smooth compared with the sluggish bookbuilding typical of some recent benchmarks, allowing for pricing within 2bp of fair value on the back of the Eu400m-plus book, which contained little price sensitivity.

The banker cited a secondary level of 4bp, mid, for Hypo’s outstanding May 2021s, and said that, based on the curves of other Nordic issuers, fair value was in the high single-digits – although noting that the initial guidance was mainly based on investor feedback. The level was meanwhile as much as 20bp wide of where the tightest Finnish names trade.

International investor participation increased from 49% to 59%, with German, Austrian and Swiss account taking a combined 45%, other Nordics 11%, and others 3%, compared with a 41% Finnish share. Official institutions were allocated 46%, banks 29%, asset managers 20%, and pension funds and insurance companies 5%. The number of accounts was in the mid-20s, according to the lead banker.

“This was a strong outcome for a Eu250m size,” she said. “The 10% increase in non-Finnish participation was key, and showed that they got real value out of the roadshow.”