NordLB made an accomplished debut in the US dollar covered bond market yesterday (Wednesday) via a well received $1bn three year deal that a lead banker said was marketed at a level designed to attract a broad audience and set the issuer up well for subsequent issuance.

NordLB, Hannover

More than $3bn (Eu2.32bn) of orders were placed for the 144A public sector backed issue, which was priced at 50bp over mid-swaps via leads Bank of America Merrill Lynch, Barclays, BNP Paribas, Credit Suisse and HSBC. This followed initial marketing at the 55bp over area, which was subsequently revised to 50bp-52bp over.

Dhiren Shah, covered bond and SSA syndicate at Credit Suisse, said that tighter pricing and a larger order book would have been possible, but that the issuer pursued the perfect strategy for an inaugural deal.

“Execution was designed to ensure the deal pulled in the broadest crowd possible and got the big real money accounts involved, which was achieved,” he said. “The aim was to leave investors with a positive taste, and hopefully this will help NordLB achieve tighter levels on following deals.”

He said the bonds are trading around 10bp tighter today (Thursday), and that this shows that pricing with a four handle would have been possible.

“You don’t want to be too cute with pricing,” he added. “It makes sense to offer a premium for an inaugural deal, and going forward pricing will take its cues from relative value considerations based on secondary levels.”

The Pfandbriefe were predominantly bought by US accounts, according to Shah, with good participation from “loyal” Asian and European investors, too. Around 70 accounts are understood to have bought bonds.

Syndicate bankers gave varying assessments of how the pricing compared with where a similar euro offering would come, with one putting it at flat to 5bp wider – “not material”, he said – and others seeing a pick-up of around 5bp or 10bp.

One said NordLB had paid up slightly more versus euros than other issuers had on inaugural dollar deals, but that this was in part due to the public sector collateral backing the trade, which US accounts were less accustomed to seeing on covered bonds.

RBS analysts noted that the new issue spread is more or less in line with secondary market levels on Scandinavian, Swiss and UK deals, although in euros the issuer trades inside these bonds, and a syndicate banker away the leads said the pricing on NordLB’s deal compared well with outstanding Scandinavian and Australian dollar deals.

“NordLB has become a perfect example of what the covered bond market around the globe has to offer,” he added.

The dollar deal is the issuer’s third benchmark covered bond this year, coming after a debut aircraft Pfandbrief and then public sector issue in quick succession in July. It is also the first US-targeted benchmark Pfandbrief to have been launched since before the crisis.