DNB Boligkreditt attracted over €2.1bn of demand to a €1.5bn seven year deal today (Thursday), its first euro benchmark in 19 months, and its pricing marginally tighter than recent Norwegian issues was cited as confirmation of the asset class’s resilience after a two week dry spell.

Leads Credit Suisse, Deutsche, DNB, UBS and UniCredit this morning went out with guidance of the mid-swaps plus 10bp area for a euro benchmark-sized seven year transaction. After an initial update reported books over €1.5bn, the spread was set at 6bp on the back of over €2bn of demand. The new issue was ultimately sized at €1.5bn, on the back of over €2.1bn of demand.

A syndicate banker away from the leads said it was a solid and routine result for the Norwegian national champion.

“It was about time they appeared,” he said, “and the amount they printed is a pretty high percentage, almost 75%, of their final order book, but investors know and like the name, so this worked in the way one would expect.”

Today’s euro benchmark is DNB’s first since a €1.5bn seven year in January 2019.

The syndicate banker put fair value at or slightly above 6bp based on the issuer’s curve, indicating a zero to slightly negative new issue premium.

“This is in line with all the other recent Norwegian trades,” he added.

A trio of Norwegian issues were launched from 15-17 September, €1bn SpareBank 1 Boligkreditt (SpaBol) and €500m Eika Boligkreditt trades in the seven year part of the curve at 7bp over, and a €500m Sparebanken Vest five year at 6bp, with new issue premiums of zero to minus 2bp.

Sparebanken Vest’s deal was one of a trio on 17 September that were the last euro benchmarks before a two week hiatus. Another banker away from the leads said the pricing of DNB’s deal at 6bp shows that conditions have returned to those of two weeks ago after last week saw no new euro benchmark issuance amid negative risk appetite across all asset classes.

“It indicates we are back to as tight as when we printed those really strong deals,” he said.

The pricing 1bp tighter than non-national champions Eika and SpaBol is justified, he said, given the highly compressed spread environment.

“It’s keeping the market where it should be,” he added.

The syndicate banker said that Scandinavian names have typically printed some 10bp wider than the tightest Pfandbrief issuers, but that the differential is now nearing around 5bp.

“It’s a signal that the market is getting very compressed,” he said, “and anyone that pays a few extra basis points to the tightest can get away with a good trade.”

SpaBol’s €1bn September 2027 issue has tightened 2bp since being priced at 7bp, according to a lead banker.

“We saw good performance there,” she said, “and during the volatility last week, covered bonds remained stable overall, so these were the drivers of why we chose to go.”

The new issue priced flat to fair value, she added, with the €2.1bn order book and €1.5bn size representing “textbook execution” for DNB.

“It’s a great achievement,” she said. “The UK was quite strong in the book, but otherwise it had quite diverse regional participation.”

Another banker away from the leads noted that the level of oversubscription was more modest than the previous Norwegian issues, but said that printing €1.5bn was nevertheless impressive considering the trade is not eligible for CBPP3.

“If it were a French or German,” he added, “it would’ve been a €2.5bn orderbook.”