Nordea Eiendomskreditt built on the impetus of the sterling covered bond market to print a £300m five year FRN today (Wednesday), upsizing from a minimum target of £250m, with the five year maturity offering optimal funding levels versus Norwegian kroner.

The new issue follows a £1bn three year FRN for Toronto-Dominion on Thursday and a £750m three year FRN for Royal Bank of Canada on Friday, which both attracted strong demand – the former being the largest ever sterling covered bond from a non-UK issuer.

The Norwegian arm of Nordea’s five year FRN was launched with guidance of the three month Libor plus 35bp area this morning. After around two hours and 20 minutes, the leads announced books had surpassed £300m. The spread was later fixed at 33bp and the size fixed at £300m (EUR342m, NOK3.25bn), with books last reported over £400m.

A syndicate banker at one of leads Credit Suisse, HSBC and Nomura said Nordea Eiendomskreditt opted for the five year maturity, rather than the three year maturity used by the Canadians last week, as it offered the most optimal pricing versus its domestic market, with the level of 33bp over three month Libor representing a saving of approximately 2bp versus the price it would have been able to achieve in Norwegian kroner.

Besides its domestic market, Nordea Eiendomskreditt has opportunistically issued covered bonds in sterling and US dollars. The new issue is Nordea Eiendomskreditt’s third sizeable sterling covered bond, following a £500m three year debut in 2014 and a £400m three year FRN in January 2016.

Bankers noted demand was substantially lower for Nordea’s trade than for TD’s and RBC’s – which had final demand of more than £1.2bn and more than £900m, respectively – but said demand is typically thinner for five year deals in the sterling market.

The lead syndicate banker added that Nordea had modest funding needs and had been targeting a minimum size of £250m, deciding to upsize to the £300m print, even though it could have printed a larger deal at the 33bp spread.

Syndicate bankers said the deal paid a new issue premium of around 3bp, seeing the last sterling five year FRN covered bonds – comprising trades from Canadian and UK names – trading at around 28bp, bid, today.