A Eu500m five year covered bond for Sparebanken Sør Boligkreditt today (Monday) attracted over Eu1bn of orders despite being price flat to or inside extrapolated fair value, with the spread deemed attractive versus those of more established Norwegian issuers.

Having been on a European roadshow last week, Sparebanken Sør Boligkreditt and its leads Commerzbank, Danske, LBBW, Nordea and UniCredit announced a mandate for a Eu500m no-grow five year covered bond on Friday.

The deal was then launched this morning with guidance of the 3bp over mid-swaps area. After one hour, the leads announced that they had taken more than Eu500m of orders. Guidance was later revised to the 1bp area plus or minus 1bp on the back of more than Eu750m of orders. The spread was then fixed at flat to mid-swaps, with the book closing above Eu1bn, including Eu55m of joint lead manager interest.

Syndicate bankers said the deal was priced flat to or even slightly inside fair value based on Sparebanken Sør’s only outstanding euro benchmark, seeing its March 2021s at minus 1bp, mid.

“That is quite some achievement for a second-time issuer,” said a syndicate banker away from the leads. “But it is not too surprising in this no premia world in which we are in.”

Bankers noted the spread nonetheless looked attractive compared with recent supply from other Norwegian issuers. They cited Sparebanken Vest March 2021s at minus 6bp and April 2022s at minus 4.5bp, and Eika Boligkreditt March 2021s at minus 5.5bp, October 2021s at minus 5bp, and January 2023s at minus 2bp.

DNB Boligkreditt and SpareBank 1 Boligkreditt, the tightest-trading Norwegian issuers, priced five year euro benchmarks at flat to mid-swaps in January, but the January 2022 issues are now quoted at minus 9bp and minus 8bp, respectively.

“Sparebanken Sør is the widest of the Norwegian covered bond issuers,” said one. “But their covered bonds are still rated triple-A, so you can get this perfectly good paper quite cheaply, compared with the more established names.”

The new issue is Sparebanken Sør’s second euro benchmark covered bond, following a Eu500m five year in March 2016.

Bankers expect further covered bond supply in the next two days, with Banco Comercial Português thought to be the leading candidate, having completed a European roadshow on Friday. The window for issuance this week is expected to close on Thursday, however, because of public holidays across Europe marking Ascension Day.