SpareBank 1 Boligkreditt was out with a lone benchmark covered bond amid a flurry of supply across markets today (Tuesday), and will price a Eu1bn long six year deal, which stuck close to guidance and IPTs that were seen as offering a limited new issue premium.

After a quiet start to the week yesterday (Monday) plenty of deals hit the primary market across asset classes this morning, including Achmea Hypotheekbank, Rabobank and UniCredit SpA in senior unsecured format.

Norway’s SpareBank 1 Boligkreditt is the only issuer tapping the benchmark covered bond market, continuing the Nordic theme of recent issuance there, after deals for DNB Boligkreditt, Stadshypotek and SEB.

After announcing the mandate for the January 2020 SpareBank 1 benchmark yesterday afternoon leads Barclays, DZ Bank, HSBC and ING set initial price thoughts at the mid-teens this morning. This generated more than Eu800m of indications of interest, according to a syndicate official on the deal, who defended it against a suggestion that demand might have been somewhat sluggish.

“It’s going well,” he said, noting the backdrop of heavy supply across markets this morning.

Guidance was set at the 15bp over mid-swaps area when the leads opened the order books at around 1200 CET, according to the lead syndicate banker. The order books have since been closed, although a update on the final size of demand was not available at the time of publication. The spread and size were fixed at 15bp over and Eu1bn, respectively.

Pricing of 15bp over compares with a re-offer spread of 7bp over for a Eu1.5bn five year trade for DNB last Tuesday (5 November), while Stadshypothek and SEB recently priced Eu1bn seven year deals at 9bp over and 10bp over, respectively.

DNB’s deal is trading at around 5bp over, according to one syndicate banker.

Bankers away from Sparebank 1’s transaction were mixed in their opinions of the spread.

“It’s on the money,” said one, saying that the mid-teens was a straight line interpolation between where a five year and seven year deal for Sparebank 1 would come – around 9bp over and in the high teens, respectively, in his view. The new issue premium was small, he said.

“I like the maturity,” he added, suggesting that it may have been that they chose a “cheeky” six year to avoid an easy pricing comparison with DNB’s five year deal.

Another syndicate banker away from the leads said that initial price thoughts of the mid-teens was a more aggressive start than that for previous recent deals, and that this was a “brave” move. Based on secondary levels, a January 2020 should be around 12bp over mid, putting the bid side at 14bp over, he said. This meant that Sparebank 1 went out with a level close to the bid side, for which the market is not quite yet ready, he suggested.

The lead syndicate banker said that the new issue premium was in line with levels seen on recent transactions.

Sparkasse Hannover yesterday priced a Eu150m public sector Pfandbrief at flat to mid-swaps for what was its public debut. Dekabank, NordLB and Sparebank Hannover were the lead managers.