Norwegian issuer DNB Boligkreditt came to the market yesterday (Wednesday) with the first Nordic covered bond of 2012, a Eu2bn 5.25 year at 68bp over mid-swaps that exceeded the issuer’s expectations by attracting the largest order book this year.

Thor Tellefsen, senior vice president and head of long term funding at DNB Boligkreditt, said the issuer had hoped to build a book of Eu2bn and issue Eu1.5bn.

“We were very pleased with the result,” he said.

The final spread of 68bp over was at the tight end of guidance of the 70bp area, meaning DNB Boligkreditt paid a new issue premium of about 5bp. Tellefsen believed the pricing was fair, despite the issuer having paid 10bp less for a long five year in 2011.

“I think the pricing is fair, and we paid a very small new issue premium,” he said. “We are in a market where UK covered bonds like Lloyds are paying 110bp more.”

Lloyds TSB Bank was in the market yesterday with a five year deal at 180bp over.

Leads Barclays, BNP Paribas, Deutsche Bank and UniCredit built a book in excess of Eu2.9bn for DNB with more than 180 investors.

“We know the pricing was fair because we got an order book of Eu2.9bn,” said Tellefsen, adding that it was the biggest order book of any benchmark covered bond so far this year.

DNB Boligkreditt settled on a five year maturity, said Tellefsen, because feedback demonstrated that the greatest demand was in that part of the curve.

“We already had an August 2017 and a January 2017, so we wanted something between,” he added.

Germany was allocated 47%, Nordics 32%, the UK and Ireland 9%, the Benelux 4%, Switzerland 2%, France 2%, and other Europe 4%. Banks took 63%, asset managers 14%, pension funds 13%, insurance companies 5%, central banks 3%, and others 2%.