SpareBank 1 Boligkreditt sold a Eu1bn five year covered bond today (Wednesday) that attracted almost Eu2bn of orders, making it the latest transaction to suggest that the five year maturity is investors’ sweet spot, even if the Norwegian was more modest than peer DNB.

After the “anything goes” rush of issuance in the opening days of the year, the most in demand issues have typically been found in the middle of the curve – including sizable five year benchmarks for Helaba, Bank of Nova Scotia and Nordea – while longer dated issues, which were in vogue for much of the latter part of 2016, have generally met with less enthusiastic receptions.

This morning, SpareBank 1 Boligkreditt leads Commerzbank, Crédit Agricole, DZ Bank and Nordea opened books for the new five year covered bond with guidance of the 4bp over mid-swaps area. Orders exceeded Eu1bn after around 50 minutes, and after books had been open for just over one and a half hours guidance was revised to the 2bp area and the size set at Eu1bn, with the books “well above” Eu1.5bn. The deal was then re-offered at flat to mid-swaps and the book closed at almost Eu2bn, pre-reconciliation. The final order book was around Eu1.7bn with around 80 accounts.

“It went very well,” said a syndicate banker at one of the leads. “In particular, we are pleased that in terms of price we were able to achieve what DNB did in the first trading sessions, which is a good result.”

SpareBank 1’s new issue is the second euro benchmark covered bond from a Norwegian issuer this year, following the Eu2bn five year issue for DNB Boligkreditt on 4 January. DNB’s deal was also priced at flat to mid-swaps on the back of over Eu3.25bn of orders.

The lead syndicate official said that it had been SpareBank 1’s aim to print Eu1bn. Most of SpareBank 1’s euro outstandings are Eu1bn-sized issues, including two euro benchmarks it sold last year, a seven year in March and a 10 year in August.

Syndicate bankers away from the leads agreed the deal had gone well.

“It’s not exactly a blowout, but there’s a lot to like about this deal,” said one. “It’s fairly standard in some ways – it’s a name people like, the Norwegians always go well – but they came with the maturity that investors want at the right price, and were able to tighten the spread a fair amount.

“Although DNB’s deal was twice the size at the same price and the same maturity, I don’t think that’s really a mark against SpaBol, as demand is lower now than it was in the first week of the year, when DNB came to market, and that’s perfectly natural. SpaBol also set the size early on in the process, which said clearly that they didn’t want to do more.”

DNB’s January 2022s were seen trading at minus 2bp, mid, this morning. Bankers noted that the two issuers’ covered bonds tend to trade roughly in line across the curve.

SpareBank 1’s deal was therefore deemed to have offered a new issue premium of 1bp-2bp, with bankers also citing the issuer’s September 2021s at minus 2bp, mid, September 2022s at minus 1.5bp, and March 2023s at minus 1bp.