Being one of two post-holiday first movers paid off for Eika Boligkreditt on Tuesday as it garnered the week’s largest book for a EUR500m seven year, EUR1.3bn – more than enough for it to be able to hit its pricing objectives, an official at the Norwegian issuer told The CBR.

Eika Boligkreditt and Germany’s Aareal Bank opened the euro covered bond market with EUR500m seven year deals on Tuesday, the first euro benchmark supply in a month. Their decision to be first proved wise, said bankers, with issuance dynamics becoming less favourable as the week progressed, and the issuers were able to achieve more convincing results than those that followed.

Anders Mathisen, senior vice president, funding, at Eika Boligkreditt told The CBR that the issuer had contemplated entering the market before the summer break, but held off as they felt the market was crowded. Upon returning from the summer break, the issuer reviewed market conditions and decided last week to announce a mandate for the deal on Monday and be one of the first movers in the post-summer market.

“The feedback we have had suggested that the covered bond market was a bit softer on Wednesday, so it was a good call to enter the market early on Tuesday,” he added.

The Norwegian issuer’s EUR500m no-grow seven year was launched by leads Commerzbank, Deutsche, ING, Santander and UBS with guidance of the 7bp area and ultimately priced at 3bp, with books surpassing EUR1.3bn – the largest of any euro covered bond issue this week.

Mathisen said it was relatively straightforward to decide on the pricing level with which to launch the deal on Monday, despite the month-long hiatus in new supply, as Eika’s leads were unanimous in their recommendations and as spreads had been stable through the summer.

“In fact, we had more or less expected to land where we did, at plus 3bp or 4bp,” he said. “It was very close to our secondaries, with a new issue concession of perhaps 2bp.

“In the end we are very happy with the deal, as it has a healthy level of oversubscription and we could probably have even tightened it by another basis point if we had wanted to, but we decided to leave some basis points on the table and hopefully offer some performance on the secondary market.”

Bankers at and away from the leads said the deal offered a final new issue premium of 1bp-2bp, seeing Eika Boligkreditt February 2025s at around flat, mid.

The last seven year euro benchmark from Norway, a EUR1.5bn issue for DNB Boligkreditt priced at 2bp over mid-swaps on 12 June, was seen trading at minus 1bp, before Eika’s deal was announced. Bankers noted that Eika’s covered bond curve now trades relatively close to that of national champion DNB, with the gap having closed considerably and with Eika’s covered bonds outperforming its compatriots’ this year.

“It is a quite impressive price, looking at the secondaries, that really solidifies the gains Eika have made compared to their peers,” said a syndicate banker at one of the leads

The deal was Eika’s first euro benchmark covered bond of the year.