SR-Boligkreditt achieved its biggest ever order book for a covered bond last Wednesday, with its green format contributing to the level of demand and zero new issue premium achieved on the €1bn seven year, according to Dag Hjelle, the issuer’s CEO and head of treasury at SpareBank 1 Sør-Norge.

The Norwegian covered bond was only the second euro benchmark covered bond in green, social or sustainable format to have been issued this year, after a €500m seven year inaugural Green Pfandbrief for Hamburger Sparkasse on 3 February. It is also only the second green covered bond from SR-Boligkreditt – the covered bond issuer of SpareBank 1 Sør-Norge – after a €500m seven year debut in 2019.

“It’s a long time since we’ve done a green covered – indeed, this is only our second overall,” Hjelle told The CBR. “And as we have assets under the green bond framework that we can utilise, we decided to add the green mark to it and show the covered bond investor community that we also direct our green assets there, and not only for senior preferred and non-preferred.”

The use of proceeds of SR-Boligkreditt green covered bonds – issued under a common framework with SpareBank 1 Sør-Norge green bond issuance – is green buildings, while other categories in the group framework include renewable energy and clean transportation.

With parts of Germany enjoying the Karneval holiday on the Tuesday, SR-Boligkreditt lined up launch for last Wednesday (18 February), and ultimately hit a relatively clear market, with only one other issuer – Italy’s Banco BPM – in the market that day, two others having opted to move on the holiday.

On Wednesday morning, leads DZ, Erste, ING, LBBW and Natixis opened books with guidance of the mid-swaps plus 30bp area for a benchmark-sized February 2033 issue, expected rating Aaa. After around an hour and a quarter, they reported books above €2bn, including €275m of joint lead manager interest, and after around two-and-a-half hours, the spread was set at 22bp on the back of more than €2.5bn of orders. The size was then set at €1bn (NOK11bn) on the back of a final order book above €2.09bn, including €250m of JLM interest, with more than 85 orders good at re-offer.

According to Hjelle, the order book is the biggest of any SR-Boligkreditt covered bond, marginally higher than its previous high.

“We are very happy with the way the book turned out,” he said, “and it was interesting to see how granular it was, with not much fast money.”

According to a lead manager, 67% of investors allocated have a green mandate, with 22% classified as dark green.

Banks and private banks took 62%, asset managers and funds 20%, central banks and official institutions 15%, and insurance companies and pension funds 3%. Germany, Austria and Switzerland were allocated 58%, the Benelux 13%, the UK and Ireland 13%, France 7%, the Nordics 5%, and other 4%.

Hjelle suggested several factors played into the deal’s success.

“There hasn’t been much green supply in covered,” he said. “And then there’s good demand for the SR-Boligkreditt name, because we haven’t been that active, and that’s also the case for the Nordics in general.

“We also understood that at this time the seven year maturity was sought after. And having the day almost to ourselves was positive.”

The level of demand enabled SR-Boligkreditt to achieve the €1bn it was targeting. The issuer guides investors that €750m is its typical size, with €1bn or €500m possible depending on how strong or not the market may prove. Its last euro benchmark, a five year in June 2025, was €750m, with a €500m eight year having preceded that in February 2024.

The leads put fair value at 22bp, implying a new issue premium of zero. Hjelle noted that this was based on the issuer’s conventional curve, and suggested that the ultimate pricing at 22bp was attributable to the green nature of the new issue, while an unlabelled bond would have come at 23bp.

“I was hoping for 22bp,” he added, “but expecting 23bp.”

With the issuer having guided the market for approximately €2bn of covered bond issuance this year, it could return in 2026, said Hjelle.

SpareBank 1 Sør-Norge is meanwhile looking forward to welcoming the covered bond community to its home town of Stavanger for the latest annual spring European Covered Bond Council meeting, in early May.

“We are looking forward to this and proud to be hosting events in our auditorium,” said Hjelle.