Sparebanken Sør Boligkreditt attracted over €1.1bn to a €500m no-grow seven year covered bond today (Thursday), with a combination of green and a back-up in yields helping the Norwegian. NordLB Luxembourg’s first renewables covered bond mandate was meanwhile officially announced.

Syndicate bankers at and away from Sparebanken Sør’s leads highlighted that the deal was aided by a recent pick-up in rates, meaning the new issue offered an only marginally negative yield, of minus 3bp. Although still negative, this was contrasted with more deeply negative levels on €500m six and seven year trades that struggled last week.

“It as a very nice trade,” said a banker away from the leads. “The back-up in rates is clearly helping covered bonds.

“Minus just 3bp rather than something like minus 25bp makes it a lot easier for investors to justify buying, particularly when it comes to a smaller name.”

After completing a roadshow yesterday (Wednesday), this morning Commerzbank, ING, Natixis, SEB and Swedbank went out with guidance of the mid-swaps plus 15bp area for the €500m no-grow seven year green Norwegian covered bond. After an initial book update of over €600m, books were later reported as exceeding €1bn and the spread was revised to 12bp+/-1bp, will price in range. The pricing was ultimately tightened to 11bp on the back of orders over €1.1bn good at re-offer.

Syndicate bankers put fair value at 10bp based on the issuer’s February 2026 paper trading at 9bp and recent SR-Boligkreditt October 2026s at around 8bp. A syndicate banker away from the leads said the new issue premium of just around 1bp was a “very nice” result for the issuer.

The deal comes a week after Austrian issuer Hypo Tirol struggled to create sufficient demand for a deal of the same size and tenor, although a syndicate banker at one the leads said that the deals were not comparable.

“Hypo Tirol are a different animal as they are a more frequent issuer,” he said. “What was different with this was that it was green, we did a roadshow, and given the green nature of this bond, we gained some extra pockets of demand.”

The lead banker said that after initially also considering a five year maturity, a seven year was chosen for the better yield it could offer, particularly given recent moves in rates.

“It’s still negative, but it’s less negative than if we went to the shorter part of the curve,” he said.

A syndicate banker at another of the leads confirmed that the recent “cautious” attitude of investors towards deeply negative yielding paper had influenced the decision to go longer.

“We ended up with something like 60 investors and the book was above €1.1bn,” he said, “so a very different outcome for a lesser known name, but the roadshow clearly proved to be very efficient.”

He said the deal had benefited from the yield similarly to a €1bn 10 year La Banque Postale deal earlier this week, which yielded a marginally positive 0.025%.

Sparebanken Sør Boligkreditt’s green covered bond is the fourth from Norway. The use of proceeds is to refinance green residential mortgages under a green and sustainability bond framework of the issuer and its parent, Sparebanken Sør.

NordLB Luxembourg Covered Bond Bank is expected to launch the first renewable energy covered bonds after a roadshow running from next Wednesday until 30 October, it was announced today, after Moody’s assigned a provisional rating to the issuance yesterday. ABN Amro, Commerzbank, Crédit Agricole and NordLB have been mandated for the €300m no-grow short to medium maturity sub-benchmark.