Belfius Bank launched its second benchmark covered bond today (Monday), a Eu500m no-grow 10 year issue that took Belgian issuance inside OLOs, while Spain’s Santander prioritised size rather than price with a Eu2bn five year cédulas this morning. Meanwhile, a DG Hyp Pfandbrief mandate hit the screens early this afternoon.

Deutsche Genossenschafts-Hypothekenbank has mandated BayernLB, DZ Bank,  NordLB, UniCredit and WGZ Bank to lead manage a Eu500m no-grow seven year mortgage Pfandbrief that will be launched soon.

Leads Belfius, Credit Suisse, JP Morgan, Natixis and UniCredit set initial price thoughts on Belfius‘ deal in the mid to high 40s over mid-swaps, guidance at the 45bp over area, and then fixed the spread at 40bp over.

Syndicate bankers away from the leads said the deal was coming inside the OLO curve, with the differential cited ranging from 15bp-25bp.

“This is a tremendously positive result for Belfius,” said one, “and will have a significant positive impact for the Belgian covered bond market.”

Others were also complimentary of the deal, noting that it represented a strong outcome. One said that the pricing showed that covered bonds “trade in their own space”, with little correlation to government bond markets.

“Before the Belgian market opened a lot of people were saying that they wouldn’t buy through govvies,” he said, “and that there would have to be a spread in the mid-teens over OLOs.”

Belfius inaugurated the Belgian covered bond market on 19 November when it launched a Eu1.25bn five year issue that, at 45bp over mid-swaps, came some 25bp over OLOs.

A syndicate banker away from today’s deal said that issue was trading in the low teens, and would have served as the main reference point.

Another syndicate banker away from the leads said that the 10 year maturity was the right choice.

“The 10 year maturity is a story to be continued,” he said. “The market is extremely open for the 10 year tenor, there is a lot of liquidity for it.”

Other issuers have recently come to market with well received long dated transactions: BBVA on Thursday placed a Eu1bn 10 year transaction, the longest dated single issuer cédulas issue since 2007, after drawing Eu3bn of orders, while Intesa Sanpaolo launched a three times oversubscribed Eu1bn no-grow 12 year deal a day earlier.

Banco Santander will price the sixth Spanish covered bond in nine working days today, a Eu2bn five year issue that drew some Eu2.6bn of orders but for which pricing did not deviate from guidance, with bankers identifying size rather than price as the priority.

Leads Banco Santander, Bank of America Merrill Lynch, Barclays, Crédit Agricole and Natixis fixed the re-offer spread at 195bp over mid-swaps, in line with guidance of the 195bp area, and will size the deal at Eu2bn. The last update on the size of the order book put demand at Eu2.6bn, according to a syndicate banker at one of the leads, who said that the issuer opted for a larger size rather than tighter pricing.

The assessment was shared by a syndicate official away from the deal, which said that pricing was fair in the context of recent deals and how they have performed, including BBVA’s Eu1bn 10 year cédulas, which came at 215bp over.

Santander’s deal is the sixth cédulas hipotecarias since Bankinter kicked off new year covered bond issuance for Spain’s banks on 10 January, with a Eu750m four year deal for Kutxabank on Friday the most recent other Spanish covered bond to have been priced, at 220bp over.

“It’s the right pricing,” said a syndicate banker away from Santander’s leads, “coming at the tight end after a rally.”