DNB Boligkreditt sold the largest single tranche euro covered bond of the year so far at the tightest ever Norwegian spread today (Monday), printing a EUR1.5bn issue at minus 10bp, supported by the recent rarity of the deal’s five year maturity and a lack of Nordic supply.

The new issue was launched without warning in a market already filled by three pre-announced euro benchmark trades, with NIBC, RLB Noe-Wien and Banco BPM each having announced mandates for new issues yesterday – NIBC and RLB Noe-Wien targeting 10 year trades and Banco BPM a seven year.

DNB Boligkreditt announced this morning that it had mandated Commerzbank, Deutsche, DNB, Natixis and NordLB to lead manage a five year euro benchmark, and the deal was subsequently launched with guidance of the mid-swaps minus 7bp area.

The Norwegian issuer’s deal stood out from the crowd by being the first euro benchmark covered bond from the Nordic region of 2018 and the first five year euro benchmark since the start of the year – with the previous shortest trade a six-and-a-half year issue for UBI Banca last week.

“The Nordics were the most notable absentee of the 2018 covered bond market, and people had been speculating when the first deal would arrive,” said a syndicate banker away from the leads. “DNB is a good name with which to start, and by going with the five year maturity they were also offering something covered bond investors have not seen for some time.”

The deal was ultimately priced at mid-swaps minus 10bp and the size fixed at EUR1.5bn on the back of around EUR2.3bn of orders.

The trade is the largest single tranche covered bond in the euro market since 9 November, when DNB Boligkreditt sold another EUR1.5bn issue, a seven year.

The final spread is also the tightest paid on a euro benchmark covered bond from Norway, with DNB’s seven year issue in November the previous record holder, with a spread of minus 9bp.

“It’s an impressive trade in terms of size and the spread, which shows just how tight the Nordics have gone,” said a syndicate banker.