SpareBank 1 Boligkreditt weathered slight softness in the non-CBPP3 segment when issuing a Eu1bn seven year covered bond today (Monday), attracting almost Eu1.4bn of orders despite being priced flat to recent shorter dated Norwegian supply. Aegon is set to sell a Eu500m issue tomorrow.

CBPP3-ineligible paper has underperformed core and semi-core Eurozone paper in recent weeks after spreads in some sectors reached near historic tights. Widening has been seen in certain names, although Nordic spreads have been generally been stable and have at most widened by 1bp-2bp.

“We are now seeing some weakness in non-ECB paper, where the potential for performance on the secondary market is not very big,” said a syndicate banker.

SpareBank 1 Boligkreditt leads BNP Paribas, Commerzbank, Danske Bank and DekaBank launched the deal this morning with guidance of the 3bp over mid-swaps area. After one hour, the leads announced that books had exceeded Eu1bn.

Guidance was later revised to the 1bp area plus or minus 1bp, will price within range, with books above Eu1.25bn, before the spread was set at flat to mid-swaps and the size at Eu1bn (Nkr9.44bn), with orders approaching Eu1.4bn, pre-reconciliation, when the books closed.

Bankers said that although the deal was comfortably oversubscribed, the book was notably smaller than those of comparable trades earlier in the year. They attributed this to the hints of weakness in CBPP3-ineligible spreads, and noted the deal had performed in line with a Eu1bn seven year covered bond for SEB last Tuesday. The Swedish bank’s deal attracted Eu1.35bn of orders, was priced at 5bp through mid-swaps, and was seen trading at re-offer today.

However, they noted the deal had been priced at the same spread as three five year Norwegian covered bonds that were sold earlier this year, including a Eu1bn five year for SpareBank 1 Boligkreditt on 18 January.

“To land at the same price as those shorter dated deals is no doubt a pleasing outcome for the issuer,” said a syndicate banker away from the leads. “Even at such tight spreads, with competing supply, and without an ECB bid, this deal has gone smoothly.”

The new issue is the tightest euro benchmark covered bond from Norway in a maturity of seven years or longer since April 2015, when Sparebanken Vest Boligkreditt priced a Eu500m seven year at 5bp through mid-swaps.

Aegon Bank announced today that it has mandated HSBC, ING, NatWest Markets, Société Générale and UniCredit to lead manage its Eu500m no-grow conditional pass-through (CPT) 10 year issue. A syndicate banker at one of the leads said the deal is set to be launched tomorrow (Tuesday).

The deal will be Aegon’s third benchmark covered bond, following a Eu750m five year debut in November 2015 and a Eu500m seven year issue in May 2016.

The last 10 year benchmark covered bond from the Netherlands was a Eu500m soft bullet issue for de Volksbank on 10 May, which was seen trading at around 3bp, mid, today.