SEB attracted some Eu1.4bn of orders to a Eu1bn seven year covered bond today (Tuesday) in what was deemed a “rock solid” result, in particular given its near-historic price and an overall tightening of Nordic spreads, with the Swedish issuer supported by its recent absence from the market.

After announcing a mandate for a seven year euro benchmark issue yesterday (Monday) afternoon, Skandinaviska Enskilda Banken (SEB) leads BayernLB, Commerzbank, Crédit Agricole, SEB and UBS launched the deal this morning with guidance of the mid-swaps minus 2bp area.

The leads announced after 50 minutes that books had exceeded Eu1bn. Guidance was later revised to the minus 4bp area on the back of books around Eu1.5bn, including Eu50m joint lead manager interest, before the spread was fixed at minus 5bp and the size at Eu1bn (Skr9.77bn) with books at Eu1.4bn, including Eu50m JLM interest.

Bankers said SEB’s deal, which extends its curve by one-and-a-half years, was priced flat to fair value. SEB June 2022s were seen trading at minus 10bp, mid, pre-announcement, and its January 2023s – its longest dated outstanding – at minus 9bp. Bankers also cited SBAB June 2022s at minus 10bp and February 2024s at minus 5bp, Stadshypotek June 2022s at minus 10bp and February 2024s at minus 6bp, and Swedbank July 2022s at minus 11bp and May 2024s at minus 5bp.

The deal is SEB’s first euro benchmark since February 2016, when it sold a Eu1.5bn five year.

“For investors, this is probably one of the most interesting credits from Scandinavia, if only because they haven’t been active in the euro covered market for almost 18 months,” said a syndicate banker away from the leads. “That will have helped their case.

“In the end it didn’t fly out the window, but it is a rock solid trade, especially given how tight the Scandis have become over the last year or so.”

The new issue is understood to be the second-tightest post-crisis euro benchmark from Sweden, behind only a Eu1bn seven year for Swedbank that was priced at minus 6bp on 23 April.

“The market today is not the same as the market that Swedbank enjoyed two months ago,” said a syndicate banker away from the leads, “so for SEB it’s a very decent price and exactly where I’d have put them.”

The Markit iBoxx Euro Sweden covered bond index has tightened 6bp year-to-date, compared with performance of 4bp in the German index, noted Maureen Schuller, head of financials research at ING.

Before today, SEB was the only one of the established Swedish euro benchmark issuers not to have issued a euro benchmark this year. Its compatriots had issued Eu4.75bn across six such deals in 2017, the last having been a Eu1bn seven year for Swedbank.

“Hence, we expect supply pressure to ease,” added Schuller, “a performance positive.”