A Eu500m short seven year benchmark from BRFkredit proved an attractive and promising reopening of the market beyond Germany yesterday (Wednesday), while group treasurer Anders Lund Hansen said there was “no reason to wait” after parent Jyske announced results on Tuesday.

After three long-dated German benchmarks in the preceding week that restarted issuance following a summer break, BRFkredit’s deal was the first non-German euro benchmark since early July and hence was seen as a barometer of sentiment.

Leads ING, Nordea, SEB and UniCredit announced guidance of 5bp over mid-swaps for the Eu500m (Dkr3.72bn) no-grow July 2024 deal yesterday morning and an hour later revised guidance to the 3bp area, plus or minus 1bp will price within range, after books topped Eu700m excluding joint lead manager interest. The re-offer was an hour later set at 2bp on the back of Eu950m of orders, and demand totalled around Eu1bn when books were closed shortly thereafter.

The pricing was deemed as incorporating little to no new issue premium – with its positive spread seen as contributing to its attractiveness – and syndicate bankers said the overall outcome was positive ahead of an anticipated pick-up in issuance.

“It proves you have enough investors without the ECB and is very promising,” said one.

Although the issuer faced no formal blackout period ahead of Jyske’s results, BRFkredit’s Hansen (pictured) said the issuer decided to approach the market just after the group’s results to be as transparent as possible in execution.

“We received constructive feedback from the joint lead managers that investors were present, and that our choice of tenor would attract them,” he said. “We saw no reason to wait until next week as the feedback was strong.

“The deal was very well received by investors, and we experienced a strong interest right from the morning. The final spread is in line with what we discussed with the joint lead managers prior to announcing the deal, and we are very happy with the outcome.”

Hansen said BRFkredit could benefit from intraday execution thanks to the investor relations work it has done and track record of its three previous benchmarks in the euro market as it has established itself over the past couple of years.

“Our approach to this our fourth deal was exactly the same as the three previous ones: we try to be as transparent in our communication as possible about our plans and intentions regarding our funding in euro covered bonds,” he added.

“We could possibly have moved the final price 1bp tighter, had we decided for a more aggressive strategy – some issuers might have taken advantage of the negative net supply in the market and the Eu500m no-grow deal size – but it is still very important for us to remain true to our execution strategy. A final spread of mid-swaps plus 2bp should give investors a good starting point for performance.”

The short seven year issue came after an aggregate Eu2bn of issuance in the 10 year part of the curve from the three German issuers in the preceding week.

“The choice of tenor in between our outstanding 2023s and 2026s was a natural next step for us in the process of building a complete curve,” said Hansen, “and at the same time taking investor appetite into consideration.”

“We had a book over Eu1bn,” he added, “and, similar to the three previous transactions, the support on our deal from the Nordic countries plus Germany was very good.”

Germany, Austria and Switzerland were allocated 57%, the Nordics 25%, the Benelux 7%, Asia 4%, Italy 3%, France 2%, and others 2%. Banks took 43%, asset managers 42%, central banks and official institutions 14%, and insurance companies and pension funds 1%. The final book contained over 65 orders.