DnB Nor Boligkreditt yesterday (Tuesday) sold a Eu2bn five year issue on the back of the second biggest order book for a euro benchmark covered bond since the end of August, with an official at the Norwegian bank calling the pricing “a fair compromise”.

Leads BNP Paribas, Barclays Capital, Deutsche Bank and Goldman Sachs re-offered the issue at 58bp over, the tight end of guidance of 58bp-60bp that was revised from the 60bp over area. Orders totalling Eu2.6bn were placed for the transaction, second only to an order book of Eu3.5bn for a Eu2bn three year Royal Bank of Scotland deal on 31 August – Nationwide Building Society on Thursday meet with Eu2.3bn of demand for a Eu1.5bn five year issue.

Thor Tellefsen, senior vice president and head of long term funding at DnB Nor, said that the issuer had been aiming for a Eu1.5bn deal, but that it decided to increase the size given the level of demand.

“The most important thing for DnB Nor and the covered bond market on the whole was to do a successful transaction,” he said. “The pricing was a fair compromise, and we felt it was important to use this opportunity to place a bond that will perform.”

Some syndicate bankers away from the deal had suggested that it could have been priced tighter, but Tellefsen noted that the spread had been adjusted during the course of bookbuilding, with all orders good at the tighter level, and that the new issue premium was relatively small.

Around 133 investors were in the final order book, not including orders from the co-leads according to Tellefsen.

Ed Markham, syndicate manager at Goldman Sachs, said that the transaction gained traction quickly, with more than Eu1bn of orders having been placed within the first 45 minutes of bookbuilding, and more than Eu2bn in just under two hours.

Guidance was revised to 58bp-60bp after two hours, with more than Eu2.6bn of orders in the final order book, he said.

“We got a strong response on Monday after announcing the mandate, and as a result of investors having done their work the previous day, when we went out with initial price thoughts on Tuesday morning there was strong momentum from the outset,” he said, adding that this was important to communicate to investors given the recent market backdrop.

“Along with the CRH and Credit Suisse issues, the deal demonstrates the market is open for the strongest names, and we are hopeful it will help pave the way for others to follow,” he said.

Markham said that January 2016 and January 2017 DnB Nor issues were trading at around 49bp and 55bp over mid-swaps, respectively, before the leads went out with guidance of the 60bp over area yesterday morning and that based on an extrapolation of these levels to fit the five year maturity the new issue premium amounted to around 7bp over.

“And given that we ended up pricing at 58bp this brings it down to around 5bp,” he said. “With new issues generically coming with premiums of around 10bp or more, a 5bp concession is testament to the credit quality and track record of DnB Nor.”

Germany and Austria took 35% of the bonds, the Nordic area 23%, the UK and Ireland 17%, the Benelux 6%, France 4%, Switzerland 4%, Italy 1%, Spain 1%, and others 9%.

Banks were allocated 41%, asset managers 34%, central banks, supras and official institutions 9%, pension funds and insurance companies 8%, corporates 2%, and others 6%.