A €500m 10 year debut green covered bond from Eika Boligkreditt today (Tuesday) returned some confidence to the market, according to bankers, who nevertheless suggested that modest oversubscription and tightening – as experienced by BNZ today – could be the “new normal”.

Following a mandate announcement yesterday (Monday), leads Crédit Agricole, Commerzbank, ING (also sole green bond structuring advisor), LBBW and Nordea this morning went out with initial guidance of the mid-swaps plus 10bp area for the €500m (NOK785m) no-grow June 2031 Norwegian covered bond, with an expected Aaa Moody’s rating. After two hours, books were reported to be above €700m, excluding joint lead manager interest, and after a little over three hours the spread was fixed at 7bp on the back of books above €1.25bn, excluding JLM interest pre-reconciliation.

Eika’s deal comes a day after Swedish Covered Bond Corporation (SCBC) only tightened pricing on a marginally oversubscribed €1bn long eight year covered bond by 1bp during execution, in an outcome that fell short of expectations.

A syndicate banker at one of Eika’s leads said that limiting the size and offering investors a green element helped the Norwegian’s transaction today.

“I think we can regain some confidence, given how the trade went,” he said. “Seeing investors coming back for the right trade at the right kind of price is good.”

Another lead banker put fair value at 4bp-5bp, based on where comparable SpareBank 1 Boligkreditt and SR Boligkreditt 10 year issues sold in March and May were trading, implying a new issue premium of 2bp-3bp.

A syndicate banker away from the leads put fair value based on secondaries at 6bp, implying a smaller new issue premium, and further noted that, re-offered at 7bp, Eika’s 10 year issue was priced at the same level as SCBC’s shorter dated trade, when it would normally be expected to come wider.

“Had they been scared after yesterday’s deal, it could’ve come cheaper to investors,” he added. “By using €500m and the green element, they stuck to a strong approach – sometimes you don’t know if you’re being strong and brave, or stupid and naïve, but I think here they were strong and brave.”

Bank of New Zealand also approached the market today, after announcing its mandate for a seven year euro benchmark yesterday.

Leads Barclays, BNP Paribas, DZ and NAB, this morning went out with initial guidance of the mid-swaps plus 15bp area for the June 2028 covered bond, with expected ratings of Aaa/AAA (Moody’s/Fitch). After a little over two hours, books were above €900m, including €30m in joint lead manager interest. After around three and a quarter hours, the spread was fixed at 13bp on the back of around €1.2bn of orders, including €30m JLM interest, and the size set at €850m (NZ$1.43bn). The final book was above €1.1bn, including €30m JLM interest.

A syndicate banker away from the leads noted the extent of demand was not substantially different from recent trades, while the pricing was tightened only 2bp.

“It feels as if this is the new normal,” he added, “for trades to see more modest oversubscription and more modest tightening in this market.”

A lead syndicate banker said the deal had exceeded expectations after being handled in a “sober” and “stringent” manner.

He said the process influenced by a seven year for Westpac NZ two weeks ago, on 26 May, which was priced at 12bp on the back of a peak book above €1.05bn and a final book of above €950m.

“Westpac NZ didn’t work that well, and we had to be mindful of this,” he added.

That was trading around 12bp, mid, according to the lead banker.

“We knew bids were wider,” he said. “No one was surprised to see this start at 15bp – the question was how tight it would work.

He noted that they then moved straight to €850m at 13bp, and that there was “no messing around” with WPIR language or a spread range, meaning investors had clarity on the final outcome.

“They achieved the right balance between size and price,” said the lead banker.

Oma Savings Bank tapped a €250m November 2027 sub-benchmark for €150m today via Danske and LBBW. Following guidance of the 9bp area, the tap was priced at 7bp on the back of a final book above €350m, excluding JLM interest. The outstandings were quoted at 3.5bp, mid, according to pre-announcement comparables circulated by the leads.