Stadshypotek today (Tuesday) issued a Eu500m 10 year covered bond backed by Finnish collateral that, supported by the scarcity of long dated Swedish paper, attracted some Eu1.15bn of orders and was priced flat to fair value. Wüstenrot Bausparkasse has mandated a roadshow ahead of a potential sub-benchmark debut.

Stadshypotek’s deal was issued out of a Finnish cover pool that is comprised mainly of residential mortgages but also contains a small share of public sector assets and was inaugurated in September 2016 with a Eu500m 10 year issue.

The Eu500m no-grow new issue was launched this morning with guidance of the mid-swaps minus 1bp area. Guidance was later revised to the minus 4bp area, plus or minus 1bp will price within range, on the back of around Eu1.15bn of orders, including Eu100m joint lead manager interest. The spread was later set at minus 5bp.

Handelsbanken, HSBC, NatWest Markets and SG were bookrunners.

“It was a really strong transaction,” said a syndicate banker at one of the leads. “We really built the book through the course of the morning to give us the best possibility of pricing close to fair value.

“In the end we feel we priced exactly at fair value at minus 5bp.”

Bankers away from the deal agreed it was priced with no new issue premium, seeing Stadshypotek October 2026s – issued out of the Finnish cover pool – and SCBC March 2027s at around minus 6bp, mid.

“The pricing is in line with how the market is currently functioning – flat to the secondaries, even at the long end,” said a syndicate banker away from the leads. “It’s a good price for them.”

Such long dated Swedish paper remains rare, with issuers from the country having typically preferred the five to seven year part of the curve, which better matches their assets.

Stadshypotek’s deal in September 2016 was the first euro benchmark Swedish covered bond with a maturity of 10 years or longer since 2011. Only one more has been issued in the interim, a Eu750m 10 year for SCBC in March.

Although Stadshypotek’s deals are distinct, being backed by Finnish collateral, bankers said the scarcity of longer dated Swedish paper would have supported demand for the new issue.

“It is a rare opportunity to get Scandi paper in the 10 year bucket,” said one. “Investors that like duration do not get so many chances to buy a name like this.

The new issue is Stadshypotek’s second euro benchmark covered bond this year, following a Eu500m seven year in February. The last euro benchmark covered bond from Sweden was a Eu1bn seven year in June.

Svenska Handelsbanken, Stadshypotek’s parent, reported its Q3 results on Wednesday.

Germany’s Wüstenrot Bausparkasse announced this afternoon that it has mandated Commerzbank, DZ Bank and LBBW to arrange a roadshow to market a newly established Pfandbrief programme, after which a euro-denominated, mortgage-backed sub-benchmark debut may follow. The roadshow will commence on 9 November.

The deal is expected to be rated AAA by S&P.

The building society assumed control of the covered bond business of Wüstenrot Bank Pfandbriefbank earlier this year.