DNB Boligkreditt built a book of Eu1.8bn for a Eu1.25bn (Nkr11.5bn) five year covered bond yesterday (Tuesday), and an official at the issuer said the result shows strong demand for non-Eurozone paper from high quality names.

The Norwegian issue was launched into a busy market, with Caffil also yesterday selling a Eu1bn long seven year and RLB NOe-Wien a Eu500m 5.5 year, but bankers away from the deal said DNB’s result stood out, as the competing CBPP3-eligible deals took lower levels of oversubscription.

Leads BNP Paribas, Nomura, NordLB and UniCredit priced DNB’s Eu1.25bn five year issue at 15bp over mid-swaps. The deal was launched with initial price thoughts of the mid to high teens, before the leads set guidance at 15bp-17bp.

“We felt this deal went really well,” said Thor Tellefsen, head of long term funding at DNB Boligkreditt. “To get books of over Eu1.8bn is a great outcome, given that we did not have support from the ECB.

“We have shown that the market is open for high quality issuers outside of the Eurozone,” he added, “and I think at least true buy and hold investors are starting to pay more attention to the much higher return they get buying us instead of the artificially tight ECB bonds.”

Over 90 accounts were in the final book, with banks taking 52% of the deal, asset managers 33%, central banks and official institutions 13%, and insurance companies 2%. Investors from Germany were allocated 57%, the Benelux 10%, the UK and Ireland 8%, the Nordics 7%, Asia 7%, France 4% Switzerland 3%, and others 2%.

Taking into account swaps and related costs, the funding achieved via the euro trade was better than could have been achieved in Norwegian kroner, according to Tellefsen.

“This spread is clearly wider than what we had anticipated paying six weeks ago, but the market has moved,” he added. “We were very clear that we wanted a deal that performed, and I think with the spread we ended up with there is good room for performance from this transaction.”

A syndicate official at one of DNB’s leads said the deal was trading 2bp tighter this (Wednesday) morning.

“That is good performance, especially given the large size of the deal,” he said. “We are very happy with that.”

The new issue arrived amid relatively stable market conditions after a period of heavy supply and widening spreads in September. Tellefsen said the issuer had planned to launch one euro deal after the summer, and had at first considered launching its deal after a major industry gathering in Barcelona in early September, before the market deteriorated.

“So we decided to sit back and wait for a calmer market when there was less supply, and today (Tuesday) was an OK day,” he said. “I don’t believe the market is going to become significantly better for the rest of the year, so it was good to just get the deal done.”

The new issue is DNB’s first euro benchmark of the year, but follows a £250m (Eu336m, Nkr3.1bn) issue in February – which was tapped to £500m in April – and a $1.25bn (Eu1.1bn, Nkr10.1bn) five year in May.

Tellefsen added that DNB had also been quite active in its domestic market before the summer, but said activity had slowed after volatility also hit the Norwegian market after the summer. However, he said the issuer’s funding needs are lower this year because its lending growth had slowed.

“After this transaction we have more or less fulfilled what we need to do this year,” he said.