ING Belgium drew over €3bn of demand to a €1.25bn 10 year Pandbrieven today (Thursday), with its quality and scarcity in conjunction with a pick-up over core European names helping the market break out of a rut of underwhelming transactions in the past week.

After announcing its mandate yesterday (Wednesday), ING Belgium leads Barclays, DZ, ING, Nykredit, Santander and UniCredit this morning went out with guidance of the mid-swaps plus 9bp area for the 10 year euro benchmark-sized mortgage Pandbrieven. After around 35 minutes, books were reported as being over €2bn, excluding JLM interest, and after around an hour and five minutes the spread was set at 5bp on the back of over €3.4bn of demand, pre-reconciliation, excluding JLM interest. The issue was ultimately sized at €1.25bn on the back of over €3bn of demand, excluding JLM interest, pre-reconciliation.

A syndicate banker at one of the leads said the deal went very well due to the high quality of the issuer and the scarcity of Belgian issuance, highlighting that so far this year more than half of total supply has come from French or German names.

“I’m not surprised people jumped at this,” she said. “It’s something different, and in general, people are not expecting a lot more from here going forward, so that also helped.”

A syndicate banker away from the leads noted that deal offered a premium over where a Belfius €500m January 2030 issue – the last Belgian deal to have hit the market – was trading.

“ING Belgium is a pretty rare name, but they always come with big sizes,” he said. “It’s way above Belfius, and it has a more than nice book size.”

He said that although Belgian covered bonds generally perform well due to their limited supply, more importantly, the transaction offered a slight pick-up versus some other core European names.

“It was bound to go pretty well starting at the plus 9bp area,” he said, “because at the end, you have this extra pick-up, namely, against French 10 years trading at around plus 2bp, which makes it a compelling case in terms of relative value.”

He said that it was difficult to draw comparisons between today’s Belgian deal and the last two euro benchmarks issued, a pair of €500m no-grow seven year mortgage Pfandbriefe from Berlin Hyp and Deutsche Hypo, which each attracted less than €800m of demand.

A syndicate banker at one of the leads said the Pfandbriefe did not significantly reflect the broader market environment and had little impact on the execution and atmosphere surrounding ING Belgium’s issue.

“They were a little different,” he said, “given they were €500m no-grow, very domestically dominated in terms of demand, and furthermore, it’s pretty much taken for granted they come at tight levels.”

He said that the Belgian deal went very well, citing how it was able to move 4bp from start to finish and drew over €3bn orders for a €1.25bn issue size.

“All things considered,” he said, “what more do you want?”

“This Belgian stuff goes well in its own right,” he added, “as it’s a well reputed, but less crowded jurisdiction – but even so, I would not have expected it to go quite as well as this did.”

He said the transaction clearly indicated the market is still long cash, given the issuer was able to drive pricing down from 9bp to 5bp and lose less than 10% of accounts in the process.

“Unless you misprice your trade completely, “he said, “you stand a decent chance to get it going well.”

Syndicate bankers at and away from the leads saw fair value for the trade at 4bp, based on the issuer’s curve.

“Their longest one was at 3bp,” said a lead banker, “so arguably fair value was at 4bp, meaning 1bp of NIP for a €1.25bn issue – we’re happy with the outcome.”