Eight benchmarks totalling €6bn hit the euro benchmark covered bond market this week, making it the busiest since August, with Norwegian issues proving highlights as scarcity and relative value enabled DNB and Sparebanken Vest to price five year trades on the back of strong demand.

The wave of issuance took year-to-date supply to €180.4bn. While full-year numbers are still expected to fall well short of the near-€200bn record of 2022, the pick-up in issuance delivered on hopes that November could provide a boost to volumes after just €10.25bn of euro benchmarks in October. Looking at potential supply before year-end, last year €11.25bn was issued between Monday, 14 November and 31 December.

The week provided a particular boost to Norwegian 2023 supply, with DNB Boligkreditt and Sparebanken Vest Boligkreditt each hitting the euro covered bond market for the first time this year and lifting issuance from the jurisdiction from three issues totalling €2.25bn previously to €4bn year-to-date.

A €1.25bn (NOK14.8bn) five year issue for DNB on Tuesday is the largest single-tranche fixed rate euro benchmark covered bond since 24 August, when Crédit Agricole Home Loan SFH sold a similarly sized five year. DNB’s last euro benchmark covered bond was a €1bn seven year in May 2021.

Leads Crédit Agricole, DNB, Helaba, Nomura, NordLB and UBS priced the new issue at 30bp over mid-swaps on the back of more than €2.1bn of demand, excluding joint lead manager interest and pre-reconciliation, after having tightened pricing from guidance of the mid-swaps plus 34bp area on the back of books above €1.75bn.

A lead banker put the new issue premium at 4bp.

“It was a super-strong trade,” he added. “€1.25bn is probably the higher end of what we thought we would be able to get, so size and price targets both achieved.”

Sparebanken Vest hit the market in the wake of its compatriot, as leads Crédit Agricole, Danske, Helaba, ING and LBBW priced its €500m no-grow five year at 34bp, 5bp inside guidance, on the back of a peak book above €1.65bn and final book above €1.54bn.

“Even though we were quite aggressive in the end, we didn’t really lose any momentum,” said a banker at one of the leads.

Syndicate bankers at and away from the two trades said scarcity value benefited both Norwegian issuers, as well as relative value.

“If you compare these Norwegians in the 30s versus German Pfandbriefe in the low 20s, they offer a very good relative value with a very good quality,” said one. “There are some technical disadvantages regarding ECB eligibility, haircuts, etc, but that’s it That’s why the Norwegians are working pretty well.”

A syndicate banker said that while the Norwegian supply demonstrated the interesting opportunities in the covered bond market, they are not available for all.

“A German, for example, wouldn’t be able to do something with a concession as low as 4bp,” he suggested. “Look at DZ Hyp: it came with 6bp for a shorter maturity, even for a €500m no-grow.”

The German issuer printed its €500m 3.7 year mortgage Pfandbrief at 16bp on Tuesday via ABN Amro, Commerzbank, DZ, Natixis, NordLB and UniCredit, following guidance of the 20bp area and with an allocatable book of €1.31bn.

“So it’s very much on a name by name, geography by geography basis,” added the banker.

Another said Sparebanken Vest’s success had overshadowed a €500m 5.25 year debut euro benchmark from Finland’s Oma Savings Bank (OmaSp) the same day. Leads Danske, Erste, LBBW and Nordea tightened pricing just 1bp from the 50bp area to 49bp, with the book peaking above €650m and the final book some €600m.

As the deal was OmaSp’s first euro benchmark – following sub-benchmark issuance previously, bankers said fair value was hard to calculate, but some noted the high pick-up over recent Finnish supply from established names, such as a €1bn five year Nordea Mortgage Bank issue at 26bp on 19 October and a €1bn February 2027 OP Mortgage Bank deal at 23bp on Monday.

Led by Barclays, BNP Paribas, DZ, Nomura and OP, OP’s new issue was priced on the back of more than €1.5bn of orders, with pricing tightened 5bp from guidance to finish at a new issue premium of around 3bp. A lead banker noted that short-dated tenors remained the easiest, and that OP could take advantage of that after having issued five and seven year benchmarks already this year.