DNB Boligkreditt priced a $1.25bn (Eu1.12bn, Nkr9.44bn) five year benchmark yesterday (Wednesday) and an official at the issuer said its use of the 144A format added value by offering investor diversification into the US even if other issuers have been dispensing with the documentation.

The Norwegian bank has been issuing in the dollar market with 144A documentation since 2010 alongside several of its Nordic peers as well as Australian and Canadian issuers. However, two weeks ago Swedbank sold a $1bn five year deal without 144A, dispensing with the documentation after having used it for previous dollar benchmarks, and three German banks have sold Reg S dollar issues this year. An official at another Nordic bank that has previously used the documentation to target US accounts meanwhile told The CBR this week that the 144A format does not today offer much added value in terms of investor distribution or pricing advantage.

However, Thor Tellefsen, head of long term funding at DNB, said that more than half of the investors that participated in yesterday’s 144A benchmark would not have participated in a euro benchmark covered bond from the Norwegian issuer, and that these investors were also among the biggest takers.

“Even if you don’t sell that much into the US you can still have a good investor base in Europe today,” he said, “and of course we could have done Reg S. But we decided to see what we could get out of the US and actually we sold surprisingly well into the US.

“We had close to 50% North America, which was better than anticipated. For us 144A was beneficial.”

He suggested that the extended investor reach of the format probably enabled DNB to achieve a $1.25bn issue size rather than the $1bn size achieved by Swedbank on 6 May.

Leads BAML, Barclays, HSBC and RBC priced the deal at 37bp over mid-swaps after having gone out with IPTs of the high 30s. The 37bp spread was the same as that achieved by ANZ on a $1.25bn five year covered bond on Tuesday and the spread paid by Swedbank on its five year earlier this month.

“The pricing was pretty much given,” said Tellefsen. “It was, let’s say, the established price and I felt it was a fair price.

“Comparing the US market versus euros is not necessarily just about the last basis point,” he added. “This is to a large extent about investor diversification.”

DNB’s last euro benchmark covered bond was a Eu1.25bn five year in September 2014 and Tellefsen said that the issuer could return with a euro benchmark this autumn.