Belfius Bank priced a Eu500m seven year mortgage benchmark covered bond at 17bp over mid-swaps yesterday, equivalent to 1bp inside the interpolated Belgian government bond curve, according to a syndicate banker on the deal.

Leads Barclays, Belfius, LBBW, Société Générale and UBS built an order book of around Eu600m for the deal on the basis of guidance of the 17bp over area, which followed initial price thoughts of the high teens.

With a re-offer spread of 17bp over, Belfius narrowly missed out achieving the same pricing as that of a Eu1bn seven year for its peer KBC last week, and the lead syndicate banker said this was in part due to widening of the Belgian government bond curve, by around 4bp, on the day, and underperformance of the KBC trade, which was trading at 18bp/16bp over.

“On a better day, if KBC and OLOs had been stable, we would have been able to price at 16bp over, but 17bp was the right number,” he said, noting that KBC’s deal was initially pitched wider, at the 20bp over area.

Ellen Van Steen, head of long term funding at Belfius Bank, said that a Eu500m seven year deal fit with the issuer’s maturity profile and limited funding programme for this year, and that the transaction was launched in response to favourable market conditions and investor demand.

“The pricing of mid-swaps plus 17bp and spread against the Belgian OLO curve, being through Belgian government bonds, is in line with KBC pricing,” she said, “and we are satisfied with this pricing at the tight end of the spread guidance.

“We are pleased with this successful seven year mortgage Pandbrieven transaction, which was able to gather solid interest from investors and allowed us to benefit from the current favourable market conditions.”

Over 50 accounts took part in the deal. Germany was allocated 77%, Norway 9%, the UK 6%, the Benelux 6%, and others 2%. Banks took 57%, asset managers 38%, central banks 2%, insurance companies 2%, and others 1%.