SEB was the third Nordic issuer in three days to sell a seven year benchmark inside fair value when it approached the market yesterday (Thursday) and sold a EUR1.25bn deal on the back of over EUR3bn of orders, although some market participants suggested it could have achieved even tighter pricing.

Leads BNP Paribas, Deutsche, Nomura, SEB and UBS went out with initial guidance of the 16bp over mid-swaps area for the Swedish deal, which compared with a re-offer of 13bp achieved by Swedbank Hypotek with its EUR1bn seven year on Tuesday. Following revised guidance of 12bp+/-1bp, WPIR, SEB’s issue was ultimately tightened to 11bp over on the back of more than EUR3bn of demand and sized at EUR1.25bn (13bn).

A syndicate banker away from the leads said the initial guidance was unnecessarily conservative and that a tighter starting point could have resulted in a tighter re-offer level, which he had advocated before launch – noting that the same could be said for a Rabobank trade last week that attracted some EUR6bn of orders and was also moved 5bp.

He put fair value for the new SEB issue at 11.5bp-12bp over, based on SEB’s June 2024s being at 10bp and its November 2027s at 12bp, with the latter deemed a little squeezed due to it having been a rare 10 year Swedish benchmark.

A lead syndicate banker acknowledged that the response to the transaction was “an upside surprise”, and that pricing dynamics were more in favour of the issuer than had been expected. He said that SEB had not only attracted more demand, but also more real money accounts and more diverse demand geographically than had Swedbank, with some 130 orders in the book.

“It was a very good transaction and everyone is very happy because it ticked all the targets and more,” he added.

SEB’s quality and scarcity since it last issued a euro benchmark in November 2017 were cited as reasons for the strength of demand, as well as the wider covered bond market exuberance.

“This was the name people wanted to see out of the Nordics,” said one banker.

He said that even better market conditions after a dovish Fed comments on Wednesday had further contributed to the strong response to SEB, but the lead syndicate banker said the covered bond market, like the SSA market, was in such great shape that any such change in market conditions had barely entered into the equation.

As well as Swedbank Hypotek, Norway’s Sparebanken Sør Boligkreditt issued a seven year euro benchmark this week, a EUR500m deal on Wednesday. Its pricing at 19bp over was deemed 1bp inside fair value.