SpareBank 1 Boligkreditt sold a rare Eu1.5bn three year euro covered bond today (Thursday), and bankers said a book of Eu1.7bn is testament to strong demand for shorter dated paper, adding that the deal also looked attractive as it offered a similar premium to recent longer dated issues.

Of some 60 euro benchmarks to have been launched since late August, only two before SpareBank 1’s issue were three year deals, a Eu500m issue from NordLB Luxembourg on Thursday of last week (29 October) and a Eu500m deal for DG Hypothekenbank on 2 September. The new issue is the first three year euro benchmark from a Nordic issuer since June 2011, when LF Hypotek tapped the maturity.

SpareBank 1’s deal today was launched into supportive market conditions, syndicate officials said, after euro benchmarks from CaixaBank and apoBank in the five year part of the curve met encouraging demand yesterday (Wednesday).

Leads Credit Suisse, HSBC, ING and UniCredit skipped initial price thoughts to announce the euro-denominated three year issue with guidance of the 12bp over mid-swaps area, before fixing the re-offer at 10bp on the back of Eu1.45bn of orders. The size was set at Eu1.5bn on the back of a final book of around Eu1.7bn.

Syndicate officials away from the leads said the deal had gone well, attributing what they described as an impressive level of demand to the deal’s maturity.

“It was an interesting choice of tenor,” said one, “and, given that they sold a longer-dated deal at the end of the summer, this was probably a smart choice, as it meant they were going after a different investor base.”

SpareBank 1 last euro benchmark covered bond was a Eu1bn seven year on 28 August, which was its first since November 2013.

“It always looked like they would get good traction for this deal, owing to that tenor and what is an attractive concession,” said another syndicate official.

Syndicate officials said the deal offered a new issue premium of around 7bp, seeing SpareBank 1 2019s at around 6bp, bid. They noted that this is roughly in line with the concessions paid on recent longer dated deals from core and Nordic issuers.

“It is interesting that they were willing to pay that concession for shorter dated funding,” said one. “The final book is at the upper end of the orders they were going to be able to get, and that is a testament to investors’ willingness to participate in these shorter dated deals, given their rarity.

“Hindsight is a wonderful thing, but they probably could have been more ambitious. But then, if the objective was just to get the deal done they then have secured good funding at what is an attractive rate.”

Syndicate officials said prevailing basis swap levels mean euro issuance looks favourable for Norwegian issuers relative to deals in dollars and sterling.

No other benchmark covered bonds were launched today, and syndicate officials said they expect the pace of supply to remain at a similar level next week, with one or two deals emerging in each good issuance window.

“Given the supportive backdrop you could say its surprising there hasn’t been more activity,” said a syndicate official. “But many issuers are done for the year, many others are rolling out of blackouts, and there are good opportunities in other markets.”