Belfius launched its fifth Pandbrieven benchmark yesterday (Monday), a Eu500m no-grow 10 year issue that was priced through the Belgian government curve, noted an official at the issuer. The bank is aiming to have a public sector programme established after the summer, she said.

“With this transaction Belfius Bank continues its strategy of diversification of funding sources and investor base as well as further optimisation of its funding profile,” said Ellen Van Steen, head of long term funding at Belfius.

Belfius has hitherto only sold mortgage-backed covered bonds, but Van Steen confirmed that development of a public sector programme is underway.

“This new programme should be finalised after the summer,” she said.

Yesterday’s transaction was one of three 10 year issues in the market yesterday, with France’s BPCE and Germany’s Münchener Hypothekenbank also tapping the maturity.

“We saw that recently launched covered bond transactions performed well,” said Van Steen, “and with a constructive market environment and good liquidity in the market for the targeted maturity, we decided yesterday to launch a 10 year benchmark for Eu500m (no grow).”

Leads Barclays, BBVA, Belfius, BNP Paribas, NordLB and WGZ priced the issue at 25bp over mid-swaps, after guidance of the 26bp over area and initial price thoughts of the high 20s.

More than Eu700m of orders from over 40 accounts were placed, according to Van Steen, who noted that 25bp over represented pricing through the sovereign curve.

A covered bond analyst said that Belgian government bonds have outperformed covered bond comparables at the long end of the curve by around 15bp year-to-date.

Germany and Austria took 51%, the Benelux 14%, Scandinavia 13%, France 10%, the UK 6%, Asia 3%, Switzerland 2%, and Spain 1%. Banks were allocated 72%, fund managers 20%, insurance companies 5%, and central banks 3%.