Nordea achieved a Nordic full house of green covered bonds with a Finnish debut today (Thursday), a €1bn no-grow three year that attracted over €2.25bn of demand, with its signature, greenness and short maturity all cited as factors helping achieve such a book and a relatively limited NIP.

The Helsinki-headquartered banking group had already issued green covered bonds out of its Danish, Norwegian and Swedish entities – the latter a SEK6bn (€550m) debut earlier this month that attracted a peak SEK15-plus of demand – but today’s issue for Nordea Mortgage Bank represents its first euro benchmark green covered bond.

Leads BNP Paribas, Deutsche, HSBC, Nordea and UBS opened books this morning with initial guidance of the mid-swaps plus 6bp area for the December 2025 deal, expected rating Aaa. After an hour and 20 minutes, they reported books above €1.5bn, and an hour later they set the spread at plus 2bp on the back of books above €2.25bn, excluding joint lead manager interest.

“This was a cool project,” said a syndicate banker away from the leads. “A very strong trade, particularly if we compare it with the OP trade, which was somewhat similar.”

He noted that Nordea’s initial guidance of plus 6bp was the level at which its compatriot’s €1bn long three year covered bond landed on 14 November – OP Mortgage Bank’s deal had initial guidance of the 8bp area and a final €1.4bn book.

“Both are strong Finnish issuers,” he added, “and OP has performed since then, but Nordea’s Nordea. Make it green, make it short, and it flies.”

Today’s issue is Nordea Mortgage Bank’s third euro benchmark of the year, and a lead banker said that although the short maturity is unusual for the issuer, it made sense after seven and 10 year trades this year in March and September, respectively.

“And then three years was the obvious choice in terms of what the market was really looking to take down better than anything longer,” he added.

A syndicate banker away from the leads said that based on Nordea’s curve, fair value could have been as tight as minus 2bp, but taking into account recent supply such as OP’s, it was arguably closer to mid-swaps flat, implying a new issue premium of 3bp give or take 1bp – lower than that achieved on most recent supply.

The lead banker said that Nordea trades at most 1bp tighter than OP, meaning that the main differentiating factor was the ESG nature of today’s deal.

“You could make an argument that this is one of the bigger demonstrations of greenium,” he added. “We had some pretty decent central bank/official institution-type orders, as you might expect, and a few of the prominent guys on the green side on the basis of the ESG angle, which also helps get the OIs more motivated.

“All that cumulatively probably helps you get a bit more price tension and extract a bit of a premium relative to conventionals.”

The deal was announced as a €1bn no-grow – when “no-grow” language is typically used for smaller trades – given that issuers such as ING had recently taken larger amounts out of the market in short-dated new issues – €1.75bn of two year funding in the Dutch bank’s case, noted the lead banker.

“You’d associate Nordea with being a €1bn or more-type issuer,” he added, “so we felt that it would help to be pro-active and offer a good degree of transparency to tell the market from the get-go that this would be minimum and maximum €1bn.”

The new issue was the only new euro benchmark covered bond today after three issues across Monday and Tuesday, with supply in other asset classes also light, and the lead banker said this made for good timing on Nordea’s part, with there being less pressure on spreads.

“All three trades they’ve done this year have been very well timed at different points and for different reasons,” he added, “and they’ve certainly left the market in a better place, which is always a good thing and very Nordea-like.”