Jyske Realkredit pulled in over €1.05bn of demand for a €750m seven-year mortgage-backed bond on Wednesday, helped by its relative rarity value.
Signs that repeat issuance is weighing more and more on the market have become obvious in recent weeks with regular visitors getting less demand than their rarer counterparts.
"Jyske is a really rare name if you want exposure to the Danish mortgage market in euros," one lead manager said. "It is basically the only candidate because Nykredit is hardly issuing, while Danske Bank when doing covereds are doing this out of their Finnish covered pool. So Jyske is your one and only option."
Commerzbank, Danske Bank, DZ Bank, ING and Jyske Bank opened books at mid-swaps plus 34bp area, around 8bp–9bp back of where market participants gauged fair value when the trade was mandated on Tuesday.
With over 55 investors engaged – including central banks and bank treasuries – and orders passing €1bn, Jyske refined the final spread to 30bp. The book more or less stayed intact despite the 4bp tightening.
"Although seven-years have been hard to place sometimes, this showed that an issuer that hasn't come to the market this year and is now opting for a bit of longer tenor still has a strong chance to attract a strong order book and therefore to tighten quite significantly," a banker away from the trade said.
Market participants said the trade was reminiscent of the €750m seven-year green covered bond Spabol printed the previous week.
"Good transactions and executions all-in-all, given the slightly longer tenor than average," a second lead manager said. "There's some scarcity value in these jurisdictions. There hadn't been a Danish covered this year, similarly for Spabol that was the first Norwegian this year, and quite a few investors have country exposure that they need to fill."
For the banker away, the new trade might have also helped assuage concerns some market participants might have had with Danish names, following Danske Mortgage Bank's recent visit to the market.
The Danish lender was unable to move pricing on a €500m January 2027 covered bond that priced alongside Spabol.
"Certainly, Danske raised concerns ... but it's just [due to] the fact that investors are so selectively deciding wether they want to participate in transactions or not," the banker away said. "It must either be an issuer they haven't had a chance to buy this year or a jurisdiction for which their country limit is not full."
Jyske has a €750m 0.25% covered bond that is set to mature on July 1 2023.