OP was today (Thursday) able to price EUR1bn long seven year covered bond just 1bp wider than a recent straight seven year for rival Nordea, although with a final book of EUR1.2bn demand was considerably lower, in what was judged to be a reflection of heavy supply from Finland.

The new issue is the third euro benchmark covered bond from Finland within seven days, following a EUR1bn seven year for Nordea Mortgage Bank last Thursday, priced at mid-swaps minus 3bp, and a EUR500m five year for Aktia Bank on Tuesday.

OP Mortgage Bank leads BNP Paribas, NatWest, NordLB and OP launched the September 2025 deal with guidance of the mid-swaps flat area this morning. The leads later announced that books had exceeded EUR1bn, before fixing the spread at minus 2bp with books over EUR1.1bn, excluding JLM interest. The size was set at EUR1bn and the book last reported at EUR1.2bn.

“I think it was a quite successful deal in the end,” said a syndicate banker away from the leads. “Pricing this 7.25 year 1bp back of the straight seven year for Nordea – the tightest name in the market – while also being able to take EUR1bn is a good outcome.”

However, another syndicate banker away from the leads noted that demand for the new issue was substantially lower than for Nordea’s trade, which attracted EUR2bn of orders, and roughly in line with that received by Aktia, and suggested this may have been due to the relatively heavy supply out of Finland.

“It didn’t fly as Nordea did,” he said. “I am not sure if they picked the best time – the market could probably have gone a day without a new covered bond – and going up against their direct rival might not have been the best thing to do after the heavy traffic we have had.

“It took them some time to announce that books had reached EUR1bn, and everyone knows that a benchmark for OP means EUR1bn at least – to print less would be a failure. They got the size but probably therefore had less leverage on the price.”

All of OP’s outstanding benchmark covered bonds are of EUR1bn or larger.

Syndicate bankers said OP’s deal offered a new issue premium of around 5bp versus its own curve, seeing its November 2024s at around minus 10bp, mid, and its June 2027s at around 5bp.

They noted the issuer had therefore followed the pricing strategy used successfully by other issuers this week, by offering a premium of around 7bp at the initial guidance stage.

Nordea’s recent seven year was seen trading at around minus 5bp, mid, this morning, while Aktia’s five year was priced at minus 3bp and seen trading at around minus 4bp.

Today’s new issue lifts euro benchmark supply this week to EUR6.25bn, more than double what had been issued in the first three weeks of May. Following this wave of issuance, which bankers noted had in general been well absorbed, the pace of supply is widely expected to slow once again owing to public holidays next week, with the UK closed on Monday and some parts of continental Europe next Thursday.

“There are many issuers still monitoring the market, but the holidays probably leave only Tuesday and Wednesday as the issuance window next week, and my gut feeling is that most issuers will decide to wait for the first week of June,” said one.