Slow progress and minimal tightening of a Swedish Covered Bond Corporation (SCBC) €1bn long eight year issue today (Monday) left bankers suggesting the market had gotten ahead of itself in its recent recovery, although Eika is set to launch a green debut tomorrow and BNZ is also due.

Following a mandate announcement this morning, leads Barclays, Credit Suisse, Goldman Sachs, LBBW and SEB went out with initial guidance of the mid-swaps plus 8bp area for the March 2030 Swedish euro benchmark, with an expected Aaa Moody’s rating. After a little over two hours, books were reported to be above €925m, including €100m in joint lead manager interest, and after around three and a quarter hours, the spread was fixed at 7bp on the back of books of around €1.1bn, including €100m JLM interest. After four and three quarter hours, the deal was sized at €1bn (SEK10bn) on the back of books above €1.15bn, including €100m JLM interest, and the size set at €1bn.

Syndicate bankers away from the leads highlighted the deal’s slow progress, movement of just 1bp in pricing, and minimal oversubscription.

“It’s not failed in any way,” said one, “but it’s not a very convincing trade.”

Another banker noted that the starting point was closer to fair value – 4bp-5bp back – than any other trade since a repricing of the market began three weeks ago, with typically IPTs closer to 8bp. The syndicate banker said the strategy was “very punchy” and the decision to print €1bn on the back of a €1.5bn-plus book that included €100m JLM interest “aggressive”.

A lead banker said that discussing fair value following the market’s recent moves was not so straightforward.

“We can hardly look at secondary values as comparables,” he said. “They priced at a new, restored fair value of plus 7bp.

“Even though there was no large oversubscription,” he added, “we felt comfortable giving those accounts that wanted the bonds a good allocation.”

However, the lead banker acknowledged that the transaction had not gone as expected.

“It’s fair to say that it did not meet all the targets and found things a bit more challenging,” he said, “which is no surprise. It is a bit of a theme we have been seeing over the last days and weeks, with some accounts still finding covered bonds not the most attractive asset class.”

Another banker away from the leads said investors are being very disciplined in their orders.

“People got a little bit ahead of themselves after the BMO trade,” he added, “and thought we could go back to where we were pre-repricing.”

Bank of Montreal last Monday priced a €1.25bn eight year issue at 8bp, implying a new issue premium of around 2bp, on the back of more than €1.85bn of demand.

SCBC’s new issue is its first euro benchmark since a €500m 10 year in May 2019, and the first Swedish euro benchmark since a €1bn eight year from Stadshypotek on 17 November.

Eika Boligkreditt this morning announced the mandate for an inaugural green covered bond and a syndicate banker at one of the leads said their plans are unchanged despite SCBC’s outcome, which he attributed to how it was handled.

Crédit Agricole, Commerzbank, ING, LBBW and Nordea are bookrunners on the Norwegian issuer’s €500m no-grow 10 year transaction, which is expected tomorrow (Tuesday).

The lead banker put fair value at around 4.5bp, based on the secondary level of a €1bn 10 year from SpareBank 1 Boligkreditt that was issued a month ago and was the most recent Norwegian supply.

A syndicate banker away from the leads said he expects it to go better than SCBC.

“Particularly when you don’t have an ECB bid, green is very nice, to try and differentiate yourself a little bit,” he said. “And to some extent, compared to SCBC today, 10 years is a little bit cleaner a maturity than long eights.”

Bank of New Zealand is also expected tomorrow, with the third euro benchmark from the country in a month, after ASB reopened Kiwi supply with a €750m 10 year on 10 May and Westpac NZ issued a €850m seven year on 26 May.

Barclays, BNP Paribas, DZ and parent NAB have the mandate for the seven year euro benchmark.

Westpac NZ’s June 2028s were quoted at 12bp, mid, according to pre-announcement comparables circulated by the leads.

Oma Savings Bank is meanwhile tapping its €250m November 2027 covered bond for €150m after an investor call today. Danske and LBBW have the Finnish mandate.