DNB Boligkreditt yesterday (Tuesday) attracted orders of $2.9bn to a $1.5bn five year 144A covered bond, allowing it to print the largest US dollar benchmark from the Nordics in nearly four years even though arbitrage in dollars has diminished, with the issuer further diversifying its investor base.

Leads Citi, HSBC, RBC and Toronto-Dominion launched the five year fixed rate issue with initial price thoughts of the 55bp over mid-swaps area yesterday morning. After the US open, guidance was revised to the 52bp area plus or minus 2bp, before the spread was fixed at 50bp and the size at $1.5bn (Eu1.39bn, Nkr12.7bn), with the books closing at $2.9bn.

“Those books are huge – definitely some of the biggest we’ve seen in this market for a long time,” said a syndicate banker at one of the leads. “Printing $1.5bn is very impressive for a Nordic issuer – sometimes the Canadians print deals around that size or larger, but it’s very rare for a jurisdiction like this.”

The deal is the largest US dollar covered bond from a Nordic country since May 2013, when SEB sold a $1.5bn five year, and the largest from any non-Canadian issuer since February 2015, when Australia’s Westpac sold a $1.5bn five year.

It is also the first benchmark US dollar covered bond from the Nordics since DNB Boligkreditt in May 2015 sold a $1.25bn six year issue.

A banker close to the deal said that one of DBN Boligkreditt’s reasons for returning to the dollar market was to achieve greater diversity in its investor base, and said this had been achieved. He added that the deal’s spread was “more or less” in line with what the issuer would have been able to achieve with an equivalent deal in the euro market.

Maureen Schuller, head of financials research at ING, calculated that the spread was equivalent to 1bp over mid-swaps in euro terms, only modestly wider than the spread of flat to mid-swaps at which DNB Boligkreditt’s last euro benchmark, a Eu2bn five year issue on 4 January, was priced. That deal was seen bid at an i-spread of minus 7bp today.

She noted that the combined three month US dollar/euro currency and euro three month/six month floating five year basis swap effect has narrowed from 58bp at the beginning of this year to 49bp today, with half the tightening taking place since mid-February. However, Schuller said that arbitrage remains more favourable in shorter maturities and, despite three out of five issuers printing covered bonds in dollars having opted for fives this year, she forecast more of a focus on shorter maturities in dollars – also in light of various euro curves still being quoted at negative yields out to three years.