Sampo Bank will today (Thursday) price its first benchmark of the year, a Eu1bn no-grow seven year that offered a premium over top tier Finnish names but came tight to the issuer’s curve, said a lead syndicate official, after some others saw a wider new issue premium.

Leads Barclays, Credit Suisse, Danske, Natixis and Société Générale built an order book of more than Eu1.7bn and will price the deal at 37bp over mid-swaps, the tight end of guidance of the 38bp over area.

Syndicate bankers away from the leads said it was a solid deal, with some seeing a larger new issue concession than what has been typical for recent issuance, namely of 5bp-7bp over the issuer’s interpolated secondary market curve.

“It’s coming considerably wider than Nordea,” added one, “and with a generous, maybe too generous new issue premium.”

He attributed what he saw as a wide level in part to the issuer’s links to Danske Bank, of which it is a subsidiary – given that Danish credits trade wider than their Nordic peers – but also to an increase in risk appetite that is forcing core credits to compete with higher yielding peripheral offerings.

“After KfW and others had to price wider I think a floor has been reached in core jurisdictions,” he said, “and new issue premiums are being demanded again.”

Kreditanstalt für Wiederaufbau this week priced a Eu5bn five year issue at 11bp through mid-swaps after having in the summer traded in the low 30s through, according to syndicate bankers.

Another syndicate official said the spread on Sampo’s deal was fair, although he thought the issue would have come tighter.

A lead syndicate official put outstanding Sampo 2016s at 21bp over mid and 2021s at 42bp over mid, and said that the new issue premium was in his view limited, at 1bp.

He said that some were seeing the issuer’s 2021s in the high 30s, but that this did not seem plausible as this would value the curve between four and nine years at around 15bp when it should be much steeper.

The leads considered the 35bp-37bp range to be fair value, he added, with the Sampo 2016s and 2021s serving as good comparables. Nordea Bank Finland and OP Mortgage Bank 2019s and 2018s were trading at around 18bp over and 15bp over asset swaps mid, respectively, he said.

Sampo’s deal offered good value for Finnish residential mortgages and a premium over Nordea and OP, which explained the Eu1.7bn plus order book, he added.

There was scope to set the re-offer spread at 36bp over, according to the syndicate official, but a sensible decision was taken to stick with 37bp over, bearing in mind a desire for the bonds to perform and that Sampo had not tapped the market for some time.

Sampo’s deal will bring euro benchmark covered bond issuance to Eu2bn this week, a far cry from the Eu4.25bn across seven deals that was raised last week, with a syndicate banker noting that most of the capital markets action was going on in the corporate and emerging markets, and that the covered bond market was “more andante”.

However, syndicate officials said that tight core supply will hit the market next week.