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Scarcity helps Jyske attract over EUR1.8bn to return

Jyske Realkredit is pricing its first euro benchmark in over 18 months at flat to inside fair value today (Tuesday), after the EUR500m no-grow long six year attracted more than EUR1.8bn of demand, with the first deal of March seen showing that an “issuer’s market” persists.

The mandate for the former BRFkredit’s first euro benchmark since August 2017 was announced yesterday (Monday) and this morning leads Credit Suisse, DekaBank, LBBW and Nordea went out with guidance of the mid-swaps plus 16bp area for the EUR500m no-grow April 2025 transaction.

Books were above EUR1bn in around half an hour, according to an update from the leads, and guidance was revised to 13bp+/-1bp with orders above EUR1.5bn after a little over an hour. Twenty minutes later the spread was fixed at 12bp with books above EUR1.8bn.

Jyske July 2024s had been trading at 11bp over mid-swaps, mid, and its October 2026s at 1.5bp, according to pre-announcement comparables circulated by the leads, and a syndicate banker away from the deal said the new issue had come flat to fair value.

“All in all this was a very good trade for the issuer,” he said. “They have not been since 2017 and it is one of the few opportunities for investors to gain exposure to a Danish underlying cover pool.”

The deal was also the first euro benchmark from any Danish issuer since November 2017, when Danske sold a EUR500m 10 year.

“Really, in the current market there’s no reason for them to price anywhere except flat to their curve,” added the banker.

A lead syndicate banker said that ahead of launch the leads had seen fair value at 12bp-12.5bp, and had been targeting a re-offer of 13bp, but were happy to be able to tighten further and achieve a “very attractive” result for Jyske.

Today is the climax of Germany’s traditional Karneval and the lead banker said some other issuers has asked if that has an impact on the market, but he noted that Jyske’s deal even drew some orders from Cologne, one of the main centres of the celebrations.

The banker away from the leads complimented Jyske’s timing, noting that they were coming after the market had tightened, but with the rally having flattened out and there now being some downside risk – even if there was little expectation of widening on the horizon.

Danske, the only other Danish issuer of euro benchmark covered bonds, has suffered from being the focus of a money laundering scandal that has also caught up other Nordic banks, but Jyske was deemed to have avoided the fallout from this. One banker suggested that, if anything, its relative position in Denmark had improved.

“It has little to do with them and they are considered low risk,” he said. “They have their own curve outstanding and there are plenty of other Nordic reference points. They do tend to trade a little back from the other Nordics, but the Danske story is pretty irrelevant here, particularly with a covered bond.”

Jyske was also judged to have benefited from the broader lack of supply in the market, with the last benchmark euro covered bond having been a EUR500m five year from NordLB Luxembourg last Wednesday, even if year-to-date issuance has been strong. Meanwhile, market conditions remain very favourable, according to syndicate bankers.

“This was very much printing in line with the template we have seen in the market recently, which was no surprise,” said one. “It is just further proof that the trends remain intact, and that this is still an issuer’s market and will remain so.”

No further euro benchmark mandates have been announced for launch this week. However, the Mortgage Society of Finland could this afternoon firm up plans for a EUR300m seven year issue that it finished roadshowing yesterday and which is expected to be launched this week.