DNB launched a Eu1.5bn five year deal this (Tuesday) morning, only two months after its last euro benchmark covered bond, with market participants deeming the Norwegian issuer’s pricing appropriate even if the deal did not attract the oversubscription levels of some deals this year.

DNB Boligkreditt leads Barclays, BNP Paribas, Credit Suisse and UniCredit set initial price thoughts in the low teens and quickly moved to a re-offer of 13bp over mid-swaps.

A syndicate banker away from the leads said that he would have expected the deal to come even tighter, but the pricing was appropriate considering a market that “felt a bit softer” than last week.

“They are not overstretching things,” he said.

Another said that the pricing was “bang on the nose”, although the book, at Eu1.9bn, might not necessarily be overwhelming and, in light of the Eu1.5bn size, it would be interesting to see how the deal performed.

The deal came only two months after DNB’s last benchmark covered bond, a Eu1bn 10 year issue launched on 14 November that an official at the bank at the time said replaced a deal that would otherwise probably have been launched in January.

Market participants said they were not surprised by DNB’s move, considering that it has considerable funding needs.

“DNB is traditionally an early year issuer,” said a syndicate banker away from the leads, “they have a lot to do that they have a certain need to get done in the course of the year so you would rather be out early.

“We are expecting to see them at least twice again in 2013,” he added.

A syndicate banker at one of the leads said that the order book reached Eu1.9bn and included a large amount of “good quality investors”.

“We had a lot of central banks and really fine accounts like insurance companies and treasuries, so we were easily able to size at Eu1.5bn,”he said.

DNB’s deal came on the same day as a Deutsche Hypo Eu500m five year trade, which was priced at 1bp over mid-swaps (see separate article).

DNB’s lead syndicate banker said that the transactions show that the market is “still absorbing the demand and the supply”, ready for tight deals from core jurisdictions as well as wider trades from peripheral issuers.

“The market can be separated in two parts,” he said, “peripherals offering a lot of spread, which appeal to investors looking for yield and keen to buy at the beginning of the year, and on the other side core issuers, such as DNB and Deutsche Hypo, that are able and keen to give only some basis points and still be well received in the market.”

France’s BPCE SFH added Eu430m to a Eu1bn February 2018 obligations de financement de l’habitat issue yesterday (Monday), pricing the tap at 29bp over mid-swaps via leads Banca IMI, Natixis, Nykredit and UniCredit, following guidance of the 30bp over area and initial price thoughts of the low 30s over.

A syndicate official at one of the leads said that the issuer’s funding needs were not large enough for a new Eu1bn benchmark, so it was decided to reopen a fairly recent outstanding issue featuring an on-the-run coupon. The February 2018 deal was first launched in September.

“The choice was pretty simple,” said the syndicate official.

Orders totalling Eu850m were gathered for the tap, allowing the leads to re-offer the increase at a level slightly inside secondary levels, with initial price thoughts having been roughly in line with these, according to the banker.