BNP Paribas Fortis sold a Eu500m seven year debut covered bond today (Monday) that is the tightest ever benchmark issue from Belgium and the tightest non-German benchmark in over a year, on the busiest day in the primary market since June.

With PKO Bank Hipoteczny and SNS Bank also offering new benchmarks, today is the busiest day in the euro covered bond market since 1 June, when four deals were sold. The three deals had been expected this week, with the issuers each having completed European roadshows last week, but bankers said it was nonetheless unusual all three had been launched today.

“It is quite puzzling that they all decided to come to the market this morning, and it leaves us wondering who else besides these three – who have been awaited for some time and were the main candidates – is going to come to the market this week,” said a syndicate banker away from the deals. “But there is enough difference between the credits and the deals to ensure that they were not in direct competition.

“In the end, the books on each deal show they were right to go.”

Following a roadshow that concluded last week, BNP Paribas Fortis leads ABN Amro, Banca IMI, BNP Paribas, Danske and Santander launched the Eu500m no-grow seven year Pandbrieven with initial price thoughts of the 6bp through mid-swaps area, before moving to guidance of the minus 8bp area on the back of Eu1.4bn of orders. The deal was then re-offered at minus 10bp.

“Minus 10bp is a very impressive result, although not unexpected,” said a syndicate banker away from the leads. “It’s a new name, but it’s a part of the BNP family, which definitely speaks in favour of the trade.

“Minus 10bp is probably where I would have priced this, given the proximity in terms of quality to the other Belgians and the issuer’s BNP background.”

Syndicate bankers away from the leads said the deal offered almost no new issue premium, seeing 2022-2024 paper from the more established Belgian issuers Belfius and KBC quoted at around minus 10bp.

The deal is the tightest ever benchmark covered bond from Belgium, surpassing the previous tightest spread of minus 8bp, set by a Eu1bn April 2021 issue for KBC Bank in April 2015.

It is also the tightest benchmark covered bond from outside Germany since June 2015, when Compagnie de Financement Foncier priced a Eu1.5bn June 2018 issue at minus 11bp. The most recent benchmark with a maturity of at least seven years to be priced with a tighter spread was a Eu750m April 2025 issue for BNP Paribas in April 2015, which was also priced at minus 11bp.

The last benchmark Pandbrieven was a Eu1bn 10 year for Belfius on 7 September, which was priced at 6bp through mid-swaps and seen this morning at minus 7bp, bid.

After Belfius’s 10 year issue last month, bankers noted that the spread differential between Belgian issuers and those from more established core Eurozone, CBPP3-eligible jurisdictions had narrowed substantially.

“This new record spread puts Belgium almost in line with France,” said a banker today. “It reflects the big spread compression we have seen across the covered bond market this year, but probably also the progress of that jurisdiction.”