ING Belgium sold a Eu1bn five year inaugural covered bond yesterday (Tuesday), coincidentally exactly a year since it started working on the programme, said an official at the bank. The deal is the issuer’s first standalone public bond sale since it was acquired in 1998.

Leads Barclays, BayernLB, ING Bank, Société Générale and UniCredit built an order book of more than Eu2.3bn for the five year transaction, and priced it at 10bp over mid-swaps, the tight end of guidance of 10bp-12bp over.

The deal brings to fruition covered bond considerations that go back to when the Belgian covered bond law was in the making, according to Hans de Munck, head of treasury at ING Belgium.

“We started thinking about covered bonds about one-and-a-half years ago,” he told The Covered Bond Report, “and kicked off with work on the programme on 3 December last year, so coincidentally it’s been exactly one year from kick-off to issuance.”

Belgian covered bond legislation came into effect in September 2012, with Belfius Bank making its debut on 19 November and KBC Bank its not long thereafter, incidentally on the same date that ING Belgium came to the market this year – 3 December.

De Munck said that ING Belgium took longer to set up its programme because it had not issued debt in the public markets on a standalone basis since being acquired by ING Bank in 1998 – prior to which it was Banque Bruxelles Lambert (BBL) – with all issuance going through the parent until the covered bond programme was set up.

“This is the first time that ING Belgium has turned to the public bond market on its own, and it made sense to do that through covered bonds,” said de Munck.

With ING Belgium, the Dutch ING group has three covered bond issuers: ING Bank itself, ING DiBa in Germany and ING Belgium. Senior unsecured public debt in euros is mostly issued by the parent company, ING Bank.

ING Belgium has a surplus of retail and corporate savings and does not need funding as such, added De Munck, but has turned to covered bonds as a means of diversifying the tenor of its funding and developing an investor base.

“It’s also a way to execute part of our lending asset strategy independently from what is happening in the retail and corporate funding market,” he said.

With respect to yesterday’s deal, De Munck said that the result was very pleasing, with orders coming in from accounts the issuer had visited on a roadshow last week but also from investors that were new to the bank.

“We weren’t desperate to do a deal this year and could have postponed until 2014 but conditions were good so we were eager to move and I think it is good that we did,” he said. “It was definitely a good window.”

The transaction came a day after Standard & Poor’s downgraded ING Belgium alongside ING Bank and some other ING entities as a consequence of it cutting the Netherlands to AA+ on Friday. De Munck said that most investors were aware that ING Belgium would be affected by the sovereign action, but that the issuer nonetheless, “out of courtesy”, wanted to wait until S&P had publicly announced the rating action on the bank before tapping the market.

Some 118 accounts participated in the transaction, which had tightened from 10bp to 7bp/5bp over in the secondary market this (Wednesday) morning, according to a lead syndicate banker.

At that level, ING Belgium’s covered bonds are trading flat to slightly through the interpolated curve for issuance from KBC, with Belfius covered bonds slightly wide of KBC’s, in particular in the short end, he added.

A syndicate banker away from the leads said that ING paid a small premium for the inaugural status of the deal, but that the covered bonds are now trading inside fair value.

Germany and Austria took 53%, the Benelux 12%, the Nordics 8%, the UK and Ireland 7%, Asia 5%, eastern Europe 5%, France 4%, Switzerland 3%, and others 3%.

Banks were allocated 40%, asset managers 34%, central banks and SSAs 14%, insurance companies and pension funds 7%, private banks 4%, and others 1%.