SpareBank 1 Boligkreditt sold the first Nordic green covered bond today (Tuesday), a EUR1bn seven year deal that, with a book of over EUR1.7bn of demand, bankers said outdid comparable conventional issues and showed the budding green segment to have momentum.

The deal is the first green covered bond from Norway and the Nordic region. SpareBank 1 Boligkreditt becomes only the third issuer of a benchmark green covered bond, following Germany’s Berlin Hyp – which has issued two such deals to date – and Deutsche Hypo – which made its debut in the format in November.

“It is very positive to see another name and another country join the green covered bond segment,” said a banker away from the deal. “The growth of the market has been slow, but with SpaBol’s contribution we can now see that it has momentum.”

SpareBank 1 Boligkreditt and leads Deutsche, ING, Natixis and UniCredit completed a European roadshow on Friday marketing the inaugural green issue, which it indicated would have an intermediate maturity.

The seven year euro benchmark was launched this morning with guidance of the mid-swaps minus 3bp area. The leads later announced that orders had exceeded EUR1bn, and subsequently revised guidance to the minus 5bp area on the back of more than EUR1.5bn of orders, including EUR90m joint lead manager interest, from more than 70 accounts.

The spread was then fixed at minus 6bp and the size at EUR1bn with the book over EUR1.7bn, including EUR90m JLM interest.

Bankers away from the leads said the green nature of the deal had a visible impact on the size of the order book, noting for example that a EUR750m seven year issue for Swedish Covered Bond Corporation yesterday – which like SpareBank 1 Boligkreditt’s deal is ineligible for CBPP3 – attracted some EUR1.1bn of demand.

“We have seen it in all the green trades to date, and again there is a pretty clear benefit for the green factor,” said a syndicate banker away from the deal.

Another agreed, suggesting that some investors had yesterday held back from participating in size in SCBC’s deal in order to participate in SpareBank 1 Boligkreditt’s new issue.

“It is just a gut feeling, but if SpaBol’s deal were a typical ‘brown’ covered bond, I could see it getting more in the context of EUR1.5bn of orders,” he added.

However, bankers said it was more difficult to discern if there had been a benefit in terms of the pricing of the deal, given a lack of comparables and that this is only the first point on the Norwegian green covered bond curve.

“Given the super-compressed covered bond environment, it might be some time before we can for certain see a green benefit in terms of pricing,” said one.

The final spread was seen as incorporating a new issue premium of 2bp-3bp versus SpareBank 1 Boligkreditt’s conventional covered bond curve, with the issuers June 2024s seen at around minus 9bp, mid.

DNB Boligkreditt sold the year’s first euro benchmark covered bond from Norway last Tuesday, a EUR1.5bn five year issue that was priced at minus 10bp and seen trading at around minus 11bp, mid, today.

The proceeds of SpareBank 1 Boligkreditt’s deal will be used to finance a portfolio of new and existing mortgages for energy efficient residential buildings in Norway. It is the first green covered bond to be based only on residential mortgages.

The bond was issued under a green bond framework aligned with ICMA’s Green Bond Principles, and an eligibility assessment of the green bond has been undertaken by DNV GL Business Assurance Services.