BNP Paribas Fortis sold its first benchmark covered bond yesterday (Monday) as a confluence of factors provided the right opportunity, according to an official at the issuer, who said its integration into the parent group was key to the preparations for and reception of the Eu500m seven year.

Representatives of BNP Paribas Fortis have been involved in the development of the Belgian covered bond market since before its opening in 2012, but Nancy Verret, head of asset based funding transactions and reporting management at BNP Paribas Fortis, said the issuer had to wait to enter the market in part because of the full integration process, after Fortis Bank was acquired by the BNP Paribas group in 2009, and had then waited for suitable market conditions.

“We are now fully integrated in the BNPP group,” she said. “Also, market conditions were not always that optimal.

“It all came together, and now was the right time.”

Verret said that the issuer had sought to join the market to achieve greater diversity of funding for the overall group.

“The BNPP group is always interested in having diversification in their funding mix,” she said, “and this was the right opportunity to get diversification based on the Belgian mortgages – which of course have an excellent reputation.”

Following the completion of a European roadshow last week, BNP Paribas Fortis leads ABN Amro, Banca IMI, BNP Paribas, Danske and Santander launched the Eu500m no-grow seven year Pandbrieven yesterday morning 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 and priced with a 0% coupon – the tightest spread and lowest coupon for a Belgian benchmark.

“It met all our expectations, and we are very pleased with the price,” said Verret. “We set out from the beginning to communicate that this is really part of the BNPP group funding programme, and that it should be considered as such.

“I think the result shows we succeeded in convincing the market of this. Because of the combination of the BNPP group name and the very high quality portfolio of mortgages backing the deal, we were able to achieve all our targets.”

Central banks and official institutions bought 41% of the deal, asset managers 31%, banks 27%, and pension funds and insurance companies 1%.

Verret said that BNP Paribas Fortis intends to return to the covered bond market with one euro benchmark issue per year.

“But just as the timing of our debut depended on many factors, our future issuance will also depend on many factors,” she added.