SR-Boligkreditt went out with a wider spread than initially anticipated for its euro debut yesterday (Monday) and an official at the issuer said the quality of the Eu750m order book vindicated its approach and the decision to hit the market ahead of anticipated competing supply.

The Norwegian issuer’s Eu500m five year deal arrived amid challenging market conditions, after oversubscription levels and pricing moves in most deals last week were limited, and with heavy supply expected this week in light of a well-stocked pipeline.

Leads Commerzbank, LBBW, JP Morgan and Société Générale priced the new issue at 12bp over mid-swaps, building a final order book of Eu750m comprising over 50 accounts. The deal was launched with initial price thoughts of 15bp before moving to guidance of 13bp plus or minus 1bp, on the back of more than Eu600m of orders.

“It was a very successful deal, we felt, in a difficult market,” said Dag Hjelle, CEO of SR-Boligkreditt. “Coming on the Monday, we saw that the backdrop wasn’t that good but the pipeline looks filled, so we thought there would be some first mover advantage.

“If that is correct we will see, but we are very happy with the deal, very happy with the book and very happy with the accounts, so this deal wouldn’t have been any better tomorrow.”

Syndicate officials away from SR-Boligkreditt’s leads noted a Eu500m five year issue from Norwegian peer Sparebanken Vest was priced at 7bp over mid-swaps on Tuesday of last week, and, while suggesting that the pricing strategy was appropriate given market conditions, said the 5bp pick up did not reflect a difference in the credits.

“We were uncertain on how things would develop after seeing weakening of the secondaries of the last trades, and on the back of that we decided to go out with wider pricing than we initially had in mind, but seeing how we ended I think it is a very good outcome,” Hjelle said. “Had we come in the same market as our peers we would have printed on equal terms.

“We are an inaugural issuer and we wanted to pay up a couple of basis points to make sure we had a successful deal,” he added.

The new issue was quoted as trading at 11bp, mid, this (Tuesday) morning, according to a banker at one of the leads.

Germany and Austria were allocated 56% of the issue, the Nordics 23%, the Benelux 10%, other Europe 6%, Switzerland 3%, and Asia 2%. Banks took 43%, asset managers 31%, central banks and official institutions 14%, corporates 8%, and insurance companies and pension funds 4%.

“It’s a very sound book, with more real money investor participation than expected,” he said. “When we now market SR-Boligkreditt further I think more lines will be open.”

Hjelle also added that the execution had progressed quickly, with the leads having gathered Eu500m of orders within an hour.

“That shows that we had the right approach to the execution for this deal, I think,” he said.

SpareBank 1 SR-Bank had previously financed its residential mortgage lending through pooled issuance via SpareBank 1 Boligkreditt, but largely for regulatory reasons established its own issuer, SR-Boligkreditt. The issuer launched its first covered bond, a Nkr2bn (Eu216m) five year deal, in June.

Hjelle said SR-Boligkreditt intends to become a regular issuer in euros, returning to the market every nine to 12 months.

“We have no plans to launch another deal this year, but we will stay opportunistic,” he said.