DNB is set to become the first European issuer to sell a US targeted benchmark covered bond this year after announcing a five year deal that is its first dollar issue in just under two years, with dollars said to be offering high quality names better terms than euros.

The Norwegian issuer has announced a five year 144A/Reg S issue via leads Bank of America Merrill Lynch, Goldman Sachs, JP Morgan and Morgan Stanley. Initial price talk was set at 50bp over mid-swaps.

The deal will be the third Nordic Yankee FIG transaction in almost two weeks, after Swedbank priced a $1bn (Eu772.8m) five year senior unsecured benchmark at 107bp over Treasuries on Tuesday of last week (5 March) and Skandinaviska Enskilda Banken (SEB) sold a $1.25bn five year senior deal at 100bp over yesterday (Wednesday).

DNB Boligkreditt’s move to tap the dollar market comes after investor pushback forced Sweden’s Stadshypotek to set guidance some 5bp wider than initial price thoughts on a Eu1bn long five year deal on Tuesday (see separate article). That deal was priced at 14bp over, after initial price thoughts of the high single-digits and guidance of the 15bp over area.

“For low beta, the euro market isn’t necessarily the best place to be anymore,” said a syndicate official, “and the US dollar market is back in favour, with deeper demand at low spreads and better pricing.”

SEB’s senior deal, for example, offered around 10bp-15bp of arbitrage versus the euro market and investor diversification at time when funding needs are limited, he added.

Syndicate bankers away from DNB’s deal said that they expect it to be priced tighter than 50bp over mid-swaps. One said that 50bp over mid-swaps in dollars equated to 15bp over mid-swaps in euros, and that the level looked fair given where five year Australian covered bonds are trading in US dollars – around 45bp over mid-swaps.

DNB’s deal would be the fourth US dollar benchmark covered bond this year, but only the first from a European issuer, after deals for Commonwealth Bank of Australia, Korea Housing Finance Corporation, and National Australia Bank.

DNB’s last benchmark covered bond was a Eu1.5bn five year priced at 13bp over mid-swaps on 15 January. At that time Thor Tellefsen, senior vice president and head of long term funding at DNB Boligkreditt, told The CBR that the issuer was looking with increasing interest at the dollar market.

“Last year DNB didn’t go to the dollar covered bond market,” he said, “but we are now in the process of refreshing our dollar documentation and we will aim for a couple of transactions there.”

He pointed out that DNB was the only Nordic credit institution to have issued two $2bn covered bond transactions in the dollar market in 2010-2011.

“We gave the market a little rest when it hit turbulence during the second half of 2011 and first half of 2012, but we will tap it again this year,” he said.