SCBC is set to issue a seven year euro benchmark issue early next week, having announced a mandate today (Friday). Supply is now expected to slow due to blackouts, but next week could see deals concentrated in a pre-ECB window, with a green SpaBol debut also awaited.

Swedish Covered Bond Corporation (SCBC) announced this morning that it has mandated Barclays, HSBC, LBBW, Nordea and UBS to lead manage a seven year euro benchmark covered bond issue. The deal is likely to be launched on Monday or Tuesday, subject to market conditions, according to bankers at the leads.

Syndicate bankers at the leads cited as comparables SCBC June 2022s at minus 13bp, mid, February 2024s at minus 12bp, and March 2027s at minus 8bp.

The issuer’s curve implies the new issue is likely to be the tightest post-crisis Swedish spread in the euro covered bond market, with the current record holder a EUR750m seven year issue for Stadshypotek that was priced at minus 8bp on 29 November.

The new issue will be the first euro benchmark covered bond from Sweden since Stadshypotek’s seven year deal, and SCBC’s first since last March, when the SBAB subsidiary sold a EUR750m 10 year.

Norway’s SpareBank 1 Boligkreditt is also expected to come to the market early next week with an inaugural, euro benchmark green covered bond. The issuer – which mandated leads Deutsche Bank, ING, Natixis and UniCredit – will complete a European roadshow today marketing the deal, which will have an intermediate maturity.

DNB Boligkreditt sold the year’s first euro benchmark covered bond from Norway on Tuesday, a EUR1.5bn five year issue that was priced at minus 10bp, the tightest ever Norwegian spread.

Greece’s Alpha Bank could also issue a euro benchmark covered bond next week, having mandated a roadshow today (see separate article), and bankers said other issuers are monitoring the market and could issue new benchmarks in the coming weeks, including at least one German bank.

However, the onset of European bank’s blackout periods, starting with some Nordic issuers this week, is expected to moderate the pace of supply over the rest of the month and into February.

In addition, the governing council of the ECB will meet on Thursday, and syndicate bankers said the window for issuance next week may therefore be limited to Monday-Wednesday.

“It does not feel like there is a huge amount of issuers lining up to join the pipeline for next week,” said a syndicate banker. “There are some candidates that have not yet come to the market that I think we will now not see this side of January.”

Another syndicate banker agreed.

“We are getting to the time of January where things thin out,” he said. “Supply will slow, but not stop.”

This week EUR5bn of euro benchmark covered bonds were issued, lifting January issuance to EUR21.25bn. Most of this week’s supply came on Tuesday, when EUR3.25bn was sold across four deals, and supply subsequently slowed.

Euro benchmark covered bond supply is roughly in line with that of the first three weeks of 2017, down just EUR1.25bn from the EUR22.5bn in the same period last year.

However, supply slowed substantially after 18 January 2017, with only two more benchmark deals launched before the end of January – albeit totalling EUR3.25bn, thanks largely to a three tranche Crédit Agricole trade – and issuance was relatively limited in February, at EUR9.15bn.