SpareBank 1 Boligkreditt attracted a peak €1.8bn of demand for its second euro benchmark of the year, printing a €1bn seven year covered bond at a small new issue premium, with the outcome for the Norwegian issue seen as a strong signal for the market.

After a mandate announcement yesterday (Tuesday), SpareBank 1 Boligkreditt (SpaBol) leads DekaBank, ING, Natixis and UniCredit opened books this morning with initial guidance of the mid-swaps plus 7bp area for the November 2028 issue, expected rating triple-A. After an initial update reporting books above €1bn, the size was ultimately set at €1bn (NOK9.7bn) and the spread at plus 3bp, with the final order book good at re-offer above €1.4bn, including €25m in joint lead manager interest.

Bankers away from the leads put fair value in the context of 1bp-2bp, implying a new issue premium of 1bp-2bp.

A syndicate banker away from the leads said the magnitude of demand was impressive.

“You have to remember it’s much easier to print €500m, so printing €1bn in itself is really good,” he said, “and SpareBank 1, like their peers, don’t have the QE bid, so it is all proper investors. In that respect, and with an order book of €1.8bn at one point, it is a strong signal to the market.”

The Norwegian issuer’s outcome was achieved at a “historically low” pick-up of 5bp-6bp versus Pfandbriefe, the syndicate banker noted.

“That also shows the strength of this transaction,” he added, “yet is maybe why there is a 1bp-2bp NIP.”

Another banker away from the leads noted the extent to which orders fell away from peak to the final book good at re-offer, which is in line with other recent euro benchmarks.

“But still,” he added, “nothing wrong with this trade.”

A lead syndicate banker said the deal went well, and that the final book at re-offer was substantial and of good quality.

“SpaBol does a lot of investor work throughout the year and is an established issuer,” she said, “and they have a very large investor base with lines open on the name. Obviously, they cannot be bought by the ECB, but they are ECB repo-eligible, so a lot of bank treasuries can buy it.

“There was quite a large proportion of central banks, supranationals and agencies coming in the book, and we had some very nice asset manager and pension fund orders.”

SpaBol’s last euro benchmark was a €1bn 10 year in May, while the last prior Norwegian benchmark was a €750m five year for Sparebanken Vest Boligkreditt on 5 October.