BRFkredit showed the late summer window to be open to more than just German issuers with a Eu500m short seven year covered bond today (Wednesday), which attracted over Eu950m of orders and was priced with little to no premium thanks to its intermediate maturity and positive spread.

The new issue for the Danish mortgage credit institution and Jyske subsidiary is the first new euro benchmark covered bond from a non-German issuer since 4 July, when Crédit Agricole issued a Eu500m long 10 year obligations foncières shortly before the onset of the summer break. MünchenerHyp reopened the euro market last Wednesday and was followed by compatriots Commerzbank and WL Bank.

“We were waiting for the first non-German issuer to see if this late summer window was just a national story or if the market was open to others,” said a syndicate banker. “It is good to see the first and it is good to see it go well.”

BRFkredit leads ING, Nordea, SEB and UniCredit launched the Eu500m no-grow July 2024 issue this morning with guidance of the mid-swaps plus 5bp area. Guidance was later revised to the 3bp area plus or minus 1bp will price within range, on the back of books in excess of Eu700m, excluding joint lead manager interest, before the spread was fixed at 2bp with books above Eu950m.

“It looks like a very good result,” said a syndicate banker away from the leads. “It’s a good maturity and it comes from outside the Eurozone with a bit of pick-up, with a Euribor plus spread

“That gives them two or three additional attractions versus a German Pfandbriefe with a double-digit negative spread in 10 years, so it is not surprising that it has gone well. That explains why they were able to price with relatively little new issue concession.”

The deal was deemed to have been priced with little to no new issue premium, with bankers citing BRFkredit July 2023s at around minus 1bp, mid, and October 2026s at around 7bp.

Bankers said the strong demand for the deal could encourage other issuers to use intermediate maturities, after WL Bank’s Eu500m 10 year Pfandbrief yesterday attracted substantially less demand than the preceding German trades, with a final book of Eu630m.

“Ten years have started to feel a bit tired,” said one. “We have had three expensive long-dated Pfandbriefe so far, and the technical demand for these kind of deals is always hard to spot.

“I therefore suspect that the name of the game for the next few trades is more the five to seven year spectrum.”

BRFkredit’s last euro benchmark covered bond came in October 2016, when it sold a Eu750m 10 year. There has been only one other euro benchmark from Denmark since, a Eu1bn five year for Danske in February.

BRFkredit is also issuing Dkr11.295bn of paper amid Danish adjustable rate mortgage (ARM) refinancing sales this week, comprising its RTL F bonds and traditional non-callable bonds.

The Jyske Bank group announced its H1 2017 results yesterday (Tuesday).