Commonwealth Bank of Australia is said to be in the market today (Monday) with a five year US dollar covered bond alongside a three year senior unsecured issue, with TD also said to be eyeing the US along with another Australian. ING-DiBa remained the most likely euro candidate.

Any dollar supply will follow a $1.5bn five year for Caisse Centrale Desjardins du Quebec last Tuesday and a $2bn three year for Credit Suisse on Thursday. CCDJ’s benchmark was priced at 77.2bp over Treasuries, equivalent to 51bp over mid-swaps.

Deals from CBA and TD would take the number of dollar benchmarks priced within the past week to four, doubling 2012 issuance in the format. Three benchmarks totalling $6bn – from UBS, Bank of Nova Scotia and Bank of Montreal – were sold in January, but apart from a $600m tap from National Bank of Canada the market no dollar benchmark supply hit the market in February.

“To me, the dollar market had been the most disappointing so far this year,” said a covered bond banker. “But now, it is the hottest market, last week and this, at least.

“For the Canadians, there the possibility that the option to include CMHC insured collateral in the cover pools is going to be withdrawn, and now that they have all come out of blackouts at the end of February, they want to do something before that happens.”

Some Canadian market participants have suggested that plans for Canadian legislation could be announced alongside the federal budget on 29 March.

CBA’s issue, its first in the currency, will be the first Australian supply since November, when ANZ launched the first US dollar benchmark from the country and was swiftly followed by Westpac. Those deals, which performed weakly after launch, were said to be at around asset swaps plus 111bp on the bid side today.

A syndicate official said that he had heard guidance of the 135bp over mid-swaps area for a three year senior unsecured CBA issue and mid-swaps plus 125bp for a five year covered bond. He said that with the three to five year curve worth about 20bp, this put the senior unsecured about 30bp wide of the covered bonds.

“That’s very tight versus the differentials between senior and covered in Europe, where they are 60bp, 70bp or over 100bp,” he said. “But then again the differential tends to be less in less volatile and more highly rated jurisdictions.

“The Aussies nevertheless seem to be getting relatively little recognition for the cover pool.”

He suggested that the strategy of bringing the senior unsecured and covered bonds at the same time raised the chances that market participants would focus on this.

Another banker said that he expected National Australia Bank to debut in the US dollar market soon.

CBA, Citi, Goldman Sachs and JP Morgan are said to be running the CBA dollar transaction.

ING-DiBa remained the only likely candidate for euro benchmark issuance today. The issuer completed a roadshow on Friday and a banker said that a mandate for a deal via BNP Paribas, Commerzbank, LBBW and ING could be on screens this afternoon for execution tomorrow (Tuesday).

“There were initial thoughts that Bankinter could emerge today,” he said, “but the markets are definitely feeling weaker, so some of those monitoring the situation will probably remain on hold, even if a Pfandbrief would likely be unaffected.”