DNB accelerated launch of an opportunistic new issue yesterday (Monday) to get ahead of an expected surge in supply after an agreement was reached over the weekend to bail out Spain’s banks, an official at the Norwegian issuer told The Covered Bond Report.

DNB Boligkreditt priced a Eu1.5bn seven year deal yesterday to take its euro benchmark covered bond funding to Eu5.5bn this year, after five year and 10 year transactions for Eu2bn apiece in January and March. The last time it sold a benchmark smaller than Eu2bn was in July 2011, when it priced a Eu1.5bn 10 year.

Thor Tellefsen, senior vice president and head of long term funding at DNB Boligkreditt, said that yesterday’s transaction was somewhat opportunistic given that the issuer had already met its funding target for the first half of the year.

“It came as a result of a lack of supply the previous week, with many investors asking why we wouldn’t do a deal,” he said. “So last week we were planning a deal for this week, but then with the Spain agreement the situation become more positive so we expected a lot of supply and decided to have a go/no-go call yesterday morning.”

An agreement among euro-zone finance ministers to lend Spain up to Eu100bn to recapitalise the country’s banks also helped pave the way for issuance in the senior unsecured and corporate markets, so that DNB found itself in the market at the same time as fellow Nordics Svenska Handelsbanken and Swedbank, which tapped the senior unsecured market.

“Ideally you would not have three Nordics out at the same time,” said Tellefsen, “but we are very pleased with Eu1.5bn at 40bp over and the deals show the strength of demand for Nordic paper.”

The Nordic trio raised Eu4bn in aggregate, with DNB’s Eu1.5bn coming on top of a Eu1.25bn three year senior unsecured deal for Swedbank and a Eu1.25bn six year senior issue for Svenska Handelsbanken.

Leads BNP Paribas, LBBW, UBS and UniCredit went out with guidance of the 40bp over area for DNB’s seven year, and priced the deal at 40bp over mid-swaps on the back of what Tellefsen said were more than Eu1.8bn of orders from around 90 accounts.

The leads skipped what has become a common stage of deal execution – communicating initial price thoughts for the purpose of collecting indications of interest – to go live directly with guidance, of the 40bp over area, according to a lead syndicate official.

He said that the lead managers were confident in accounts’ familiarity and comfort with the issuer, and that an issuance window “that could be measured in hours, not days” contributed to this move.

Syndicate bankers away from the leads said the pricing was tight – “punchy” for one and “spot-on” for another – while Tellefsen said the level was fair and sensible, and that all orders were good at 40bp over.

“Being a Nordic issuer is a good position to be in in a turbulent world,” he added. “There was positive momentum yesterday but there is still no final solution in Spain and there are Greek elections this weekend so a lot can happen.”

DNB has 80%-90% fulfilled its wholesale funding plan for 2012, according to Tellefsen, and may not return to the benchmark euro market this year.

“This also has to do with the fact that we are growing slower on the lending side and faster on the deposit side that was expected, so we have done a large part of what we need to do,” he said.

Germany and Austria took the bulk of the bonds (50%), followed by the UK and Ireland with 14%,  and France 13%, with the rest allocated to Nordic, Swiss and other European accounts. Banks took 60%, asset managers 26%, insurance companies 7%, central banks 3%, and private banks 2%.