The Sims Medieval. It has an inherent quality of Legendary and does not receive a bonus to stats when crafted at Legendary quality.
Balmung is one of four possible swords which are rewarded for successfully completing the quest Cutting Edge. (The others being Trenfher, Galatine and Seraphim)
To get this weapon, you need to choose Electrum as the catalyst at a certain point in the quest to "augment the catalyst with", and choose "A Wicked Blade" in the final dialog.
This weapon can be crafted by the Blacksmith under special conditions. Depending on which catalyst the Blacksmith has chosen in the quest Cutting Edge, at the end of the quest, two sword recipes will be permanently unlocked at the Forge. (either Seraphim and Galatine, or Balmung and Trenfher). However, one of the key ingredients is the Superior Alloy which can only be crafted while the quest Cutting Edge is active. Thus, to be able to craft any of the four swords, extra Superior Alloy must be crafted while the quest is active, while the swords themselves are craftable only after the quest has ended.