Sparebanken Vest attracted demand of some EUR580m for a EUR500m seven year issue today (Tuesday), with its relative pricing versus recent Norwegian supply seen as having constrained demand amid growing investor selectiveness. BPCE is due with a seven and a half year tomorrow.

Sparebanken Vest Boligkreditt’s new issue is the fourth euro benchmark covered bond from Norway this year, and the second with a seven year maturity, following a EUR1bn green issue for SpareBank 1 Boligkreditt that was priced at minus 6bp on 23 January.

Following a mandate announcement yesterday (Monday), leads Deutsche, DZ, HSBC, ING and Swedbank launched the EUR500m no-grow issue with guidance of the mid-swaps minus 4bp area this morning.

After around one and a half hours, the leads announced that books had exceeded EUR500m. The spread was subsequently fixed at minus 5bp with the final book at around EUR580m, including EUR25m joint lead manager interest.

Bankers away from the leads described the result as modest, with the level of oversubscription substantially lower than for recent Nordic trades, noting that fellow Norwegian issuer Sparebanken Sør Boligkreditt attracted over EUR800m of orders to a EUR500m five year covered bond last Tuesday.

“We would have hoped for a slightly bigger book,” said a syndicate banker at one of the leads.

Bankers at and away from the leads said that Sparebanken Vest’s curve indicated that fair value for the new issue was minus 9bp-8bp, implying the final spread incorporated a new issue premium of 3bp-4bp.

“The initial guidance offered a new issue premium of 5bp, which was in line with the approach used by recent deals like Swedbank and Deutsche Bank,” said a syndicate banker at one of the leads.

However, some bankers suggested that investors might instead have been looking at the recently issued SpareBank 1 Boligkreditt January 2025s as the most useful comparable, and deemed Sparebanken Vest’s spread too tight, with others likely resisting efforts to tighten the spread beyond the final 5bp level, even if the new issue premium based on Sparebanken Vest’s curve was 3bp-4bp.

“Deals from the national champions were being referenced as comparables as well,” said a syndicate banker at one of the leads, “and maybe the differential was not seen as juicy enough for a few accounts, who saw the spread as being a touch expensive versus DNB and SpaBol.”

Sparebanken Sør Boligkreditt’s EUR500m five year last week was also priced at minus 5bp, and seen trading at minus 6bp today.

“Investors might not have been too keen to buy a seven year Norwegian covered bond at the same spread they bought a five year Norwegian covered bond last week,” said a banker away from the leads.

A EUR500m eight year Pfandbrief for Berlin Hyp yesterday attracted final demand of over EUR700m, including EUR55m JLM interest, and was priced in the middle of initial guidance at minus 15bp. Bankers at the German issuer’s leads said a tighter print would have been possible and that the issuer had decided not to squeeze the spread, but some bankers away from the deals nevertheless said demand for both Berlin Hyp and Sparebanken Vest’s trades was relatively modest compared to demand earlier in the year and cited the results as evidence that investors are becoming increasingly selective.

“We can see in recent deals that some investors are maybe feeling less pressure to buy at whatever level, and are more willing to miss out on certain trades,” said one. “Berlin Hyp chose to price in the middle of guidance, while Sparebanken Vest chose to take the extra basis point.”

Bankers also noted that, unlike Berlin Hyp, Sparebanken Vest did not have the support of CBPP3. Central banks and official institutions bought 34% of Berlin Hyp’s deal.

BPCE SFH announced a mandate today for a euro benchmark covered bond issue with a seven-and-a-half year maturity, via leads Barclays, Crédit Agricole, Mediobanca, Natixis, Nykredit and UniCredit. The deal is expected to be launched tomorrow (Wednesday), subject to market conditions.