Belgium’s KBC launched its second benchmark covered bond of the year today (Tuesday), a Eu1bn seven year deal on which the spread was reeled in from initial price thoughts to end up at a “very good price” versus comparables, said a lead syndicate banker.

Leads DZ Bank, KBC, LBBW and RBS announced the deal this morning. They gathered more than Eu2bn of orders for the mortgage backed issue, and will price the deal at 16bp over mid-swaps. Initial price thoughts were set at the 20bp over area, and tightened to the 18bp over area at the guidance stage.

A syndicate official away from the deal said it was a good trade and that the pricing was spot-on. Another said he thought initial price thoughts were cheap, but that the final spread was fair.

“It’s a good name and a good maturity,” he said. “Everyone was expecting a seven year.”

The transaction is KBC’s third benchmark covered bond, after a five year launched in December last year and a 10 year sold at the end of January. A lead syndicate banker said these were trading at around 6bp over and 29bp over, respectively, and that a re-offer spread of 16bp over meant today’s new issue was coming flat to through KBC Bank’s curve.

“It’s a screaming price,” he said.

September 2020 Belgian government bonds were trading at 16bp over mid-swaps, according to the lead syndicate official.

He pointed out that the re-offer spread is also tighter than where a Eu1bn seven year for ANZ Banking Group was priced recently, at 17bp over, although Australian paper typically trades tighter than Belgian covered bonds.

“It priced flat to secondary Dutch levels,” he added. “It’s a very good price.”

There was a little bit of price sensitivity in the order book, he said, but only a very small amount.