Belfius today (Tuesday) attracted over €3.3bn of orders to a €500m 10 year deal priced flat to inside fair value, with Belgium’s rarity cited as a factor in the “mind-blowing” demand, while DZ further demonstrated the viability of negative-yielding deals with the shortest euro benchmark of 2020.

Announcing Belfius Bank’s mandate this morning, leads Belfius, Citi, DZ, LBBW and Natixis went out with guidance of the mid-swaps plus 9bp area for a €500m no-grow 10 year transaction. After around 35 minutes, books were reported as being over €1.5bn, excluding JLM interest, and after around an hour and 10 minutes, the guidance was revised to 5bp+/-1bp, WPIR, on the back of over €2.5bn of demand, excluding JLM interest. The spread was ultimately set at 4bp, on the back of over €3.3bn of demand good at re-offer.

Syndicate bankers away from the leads were surprised that the deal was selling “like hot cakes”, as one remarked. Another said even if investor demand across the board has been particularly strong of late, Belfius’s more than six times-subscribed order book was “mind-blowing”.

“I didn’t see this one coming to be honest,” he said. “Even in such a strong market, it’s ridiculous how there can be over €3.3bn of interest in something that doesn’t show any value.”

He saw fair value for the trade at 5bp, implying minus 1bp of new issue premium, based on Belfius September 2029s and June 2028s trading at plus 5bp, and said that the deal may have appealed to investors because 10 year deals have since the beginning of the year made up a lower share of supply than usual.

“It probably fills the pockets of those that have loaded more with 15 and seven years,” he added, “and this constitutes a nice in-between for them.”

A lead syndicate banker said the high level of oversubscription was largely due to the rarity of Belgian risk in the covered bond market, with only issuance from Axa Bank Europe SCF (which has Belgian collateral) and Belfius since the beginning of last year.

“If you compare that with France,” he said, “there is real scarcity value for paper from this jurisdiction.”

He said that announcing the size as a €500m no-grow helped greatly.

“The book is really, really impressive,” he added, “with 130 investors and quite decent orders, meaning everyone was rushing to put cash at work in this.”

He said the pricing of 4bp was flat to or just inside fair value.

After announcing DZ Hyp’s mandate yesterday (Monday), leads DZ, Erste, ING, LBBW, TD and UniCredit went out with guidance of the mid-swaps plus 1bp area for the €750m no-grow four year mortgage Pfandbrief. After around 50 minutes, books were reported as being over €1.5bn, excluding joint lead manager interest, and after around an hour and 35 minutes, guidance was revised to minus 1bp+/-1bp, WPIR, with the book above €2bn, excluding JLM interest. The deal was ultimately priced at minus 2bp, on the back of orders over €2bn.

A syndicate banker away from the leads said an almost three times-subscribed order book for a deeply negative yielding four year – it was priced at minus 0.226% – showed strong investor appetite in buying along the curve at very tight levels.

“Helaba tested the water last week with its five year,” he said, “so they decided to go a year shorter.”

He saw fair value for the trade at minus 3bp, based on DZ Hyp’s curve and Helaba’s 2025 paper trading at minus 1bp. “Base case would have been minus 1bp,” he said, “and on the back of the big book, its explainable how you can print it a basis point within Helaba for one year shorter.”

A syndicate banker at one of the leads said the result, for a deal that was slightly “off-piste” in relation to tenors that have come so far this year, was exceptional, pricing flat to fair value with virtually no new issue premium.

“It further reinforces the fact that frankly, there’s no need to be afraid of negative rates,” he said.

The lead banker said that in spite of the level of outright yields and likely pricing through mid-swaps, the issuer was ahead of launch confident the transaction would be well received.

“The general momentum around the market and the level of subscription we’ve been seeing – CBPP3 has certainly not hurt – on transactions year-to-date gave us a lot of confidence to proceed,” he said.

He saw fair value at around minus 2bp, based on DZ Hyp December 2024s trading at minus 3bp, and Commerzbank January 2024 paper at minus 2bp.

Another lead banker said DZ Hyp’s bookbuilding was slightly quicker than Helaba’s, but noted that it was a single tranche as opposed to Helaba’s dual-tranche deal.

“We had books closed in around two hours at 10:45 CET,” he added, “fixed the spread at plus 2bp with almost no accounts dropping – that’s good.”

Meanwhile, DekaBank issued a €250m no-grow 15 year public sector Pfandbrief at 5bp over mid-swaps that attracted €440m of demand, with pricing tightened by 3bp during execution. And Oberbank priced a €250m no-grow 10 year deal, tightening by 3bp to launch at plus 7bp on the back of €525m of demand.