A €1bn seven year DNB covered bond today (Wednesday) saw more measured execution than recent issuance, with guidance for the relatively small trade closer to fair value, and the book rising upon final pricing. Compatriot SpareBank 1 Boligkreditt is expected tomorrow with a 10 year.

After DNB announced results last Thursday and its mandate yesterday (Tuesday), leads Barclays, Crédit Agricole, Deutsche, DNB, NordLB and UBS this morning went out with guidance of the mid-swaps plus 3bp area for a seven year trade that a lead syndicate banker noted was capped at €1bn and hence smaller than the €1.5bn-plus deals the Norwegian has issued in recent years.

The leads reported books above €1bn after around an hour, and then after around two and a quarter hours set the spread at mid-swaps flat on the back of some €1.45bn of orders. The final book then reached €1.8bn.

“Interestingly enough,” said the lead banker, “we got some incremental demand after we set the pricing, whereas usually we see a downsizing after the spread is set. It was clear that the issuer was not going to squeeze through fair value and investors appreciated that.”

DNB’s 3bp move from guidance to final pricing was short of the 4bp-5bp moves of recent supply, some of which has been priced inside fair value after initial guidance was set 4bp wide of fair value.

Syndicate bankers at and away from the leads put fair value for DNB’s new seven year issue at mid-swaps flat, with its October 2027s and green January 2031s also at mid-swaps flat, according to pre-announcement comparables circulated by the leads.

A banker away from the leads said that the green nature of DNB’s January 2031s – issued this January – could mean that its curve trades slightly tighter than it otherwise would, and that investors might therefore have been particularly concerned about any attempt to price tighter than mid-swaps flat. He said this meant the development of the book at first glance appeared less impressive than on some of DNB’s previous transactions.

“But they had €1.8bn allocatable for a €1bn trade,” he added, “so it was definitely a good deal, even if they had some hurdles to overcome.”

The mandate for SpareBank 1 Boligkreditt’s (SpaBol’s) 10 year euro benchmark was announced today after DNB had closed books. Citi, Crédit Agricole, Danske and DZ are expected to launch the new issue tomorrow (Thursday).

According to pre-announcement comparables circulated by the leads, SpaBol November 2029s were trading at mid-swaps plus 3bp on an i-spread basis, while SR-Boligkreditt March 2031s were at 3.5bp. They also noted DNB’s green January 2031s at mid-swaps flat.

SpaBol’s last euro benchmark was a €1bn seven year green covered bond in September.