SpareBank 1 Boligkreditt achieved its aim of diversifying its investor base with a £500m five year FRN on Monday that reached 20 accounts new to the name, according to managing director and CEO Arve Austestad, who said the issuer will continue to monitor a market that is “developing nicely”.

The deal was the Norwegian issuer’s inaugural sterling benchmark covered bond, and the first sterling benchmark from Norway since Nordea Eiendomskreditt sold a £400m three year FRN in January 2016.

Austestad, managing director and CEO of SpareBank 1 Boligkreditt, told The CBR that the issuer entered the sterling market to diversify its investor base.

“In the last few years we have focussed on issuance in euros and Norwegian kroner,” he said. “In the last couple of years, there has been limited participation in these deals from the investor community in the UK.

“We wanted to address that by issuing directly in sterling. We had been looking at the sterling market for quite some time, and given that size aspirations in sterling are lower than in the euro market, it fit better with our current funding requirements.”

SpareBank 1 has no sterling assets it was seeking to fund via the transaction, with the mortgages in its cover pool solely denominated in Norwegian kroner.

Austestad said the issuer also decided that the time was right to enter the market because demand was now deeper for a five year trade, which better matched its assets. Five year supply remains relatively uncommon in the sterling market, with three or four year issues typically preferred. Of the 15 sterling benchmarks issued this year prior to SpareBank 1 Boligkreditt’s deal, only three were five years.

“It looked like the sterling market was now more receptive for a five year than it had been a year or two ago, when the preference was for something in the three year bucket,” said Austestad. “That was the turning point.”

The deal followed a three day UK roadshow last week, during which the issuer gauged demand for either a fixed rate or floating rate transaction, eventually settling on the latter in response to investor feedback.

On Monday, leads Credit Suisse, HSBC and NatWest Markets priced the £500m (Eu568m, Nkr5.37bn) issue at 27bp over three month Libor on the back of over £850m of orders, having gone out with initial price thoughts of the 30bp area for a benchmark size.

“It was a very strong reception,” he said. “Our initial sizing aspirations were to do a £250m-£300m deal, but because of the size of the order book we upsized the transaction.”

The final book stood at over £800m with 30 investors, 20 of which had not invested in SpareBank 1 Boligkreditt before.

“In every aspect, this deal achieved what we wanted to achieve,” said Austestad.

He added that the all-in cost of the deal was roughly equivalent to what the issuer would have had to pay for an equivalent euro or Norwegian krone issue.

Having made its debut, SpareBank 1 Boligkreditt will continue to monitor the sterling market over the coming years.

“The sterling covered bond market is getting more and more busy and is developing nicely,” said Austestad. “Given the size of each transaction, it’s a good market for us to diversify in, so we are aiming to regularly have a look at this market.”