Länsförsäkringar Hypotek priced a Sfr125m (Eu101m) 10 year covered bond yesterday (Thursday), which the Swedish issuer was able to print flat to Swiss franc mid-swaps and through the curve of domestic Swiss covered bond issuers, according to a lead syndicate banker.

Alexander Hoffmann, syndicate banker at sole lead Credit Suisse, said that the transaction was priced at a level that no other non-domestic issuer has reached in the past five years.

“According to our data, the last negative launch spread achieved in covered bond format has been a NordLB 10 year issue launched at mid-swaps minus 3bp in December 2007,” he said.

“Pricing flat to mid-swaps was a great result and gave us the possibility to test if we could reach such a level, which constitutes almost a ‘psychological limit’,” he added.

The deal was initially marketed at a Sfr100m size, but was increased to Sfr125m as a result of strong investor demand, said Hoffmann.

He noted that another good result for a non-domestic issuer such as LF Hypotek was being able to price an issue through the curve of Switzerland’s main issuers, Pfandbriefbank schweizerischer Hypothekarinstitute and Pfandbriefzentrale der schweizerischen Kantonalbanken.

The 10 year issue attracted mainly domestic investors, said Hoffmann. Asset managers were allocated 38%, pension funds 25%, insurance companies 12%, internal (lead) bank treasury 15%, and external bank treasuries 10%.

LF Hypotek has tapped the Swiss franc covered bond market before, with three other outstanding covered bonds, a 2014 floating rate note, and 2015 and 2019 issues, said Hoffmann.