RBC is out with the first Australian dollar covered bond of 2013, a three year FRN that will be its third benchmark covered bond in two weeks as the issuer follows up on approval of its programme under a new legal regime to target pent-up demand for Canadian paper.

Leads ANZ, NAB and RBC opened books on Royal Bank of Canada’s deal late in the day local time today (Monday) given that it had been a busy session in the Australian dollar market, with Goldman Sachs, for example, out with a senior unsecured trade, according to a syndicate banker at one of the leads.

The RBC deal was marketed at the 55bp over three month BBSW area, and around A$1bn (US$925m/Eu696m) of orders have been placed so far, according to a Sydney-based syndicate official on the transaction. The deal is set to be priced tomorrow.

It is the first Australian dollar covered bond since November, when Suncorp-Metway sold a A$600m five year deal, and is RBC’s third benchmark covered bond, and fourth deal overall, in less than two weeks.

On 16 July the issuer launched the first deal under a new Canadian legal covered bond framework, a US$1.75bn three year issue, and last week after it followed this up with a $2bn five year senior unsecured deal and then a Eu2bn seven year covered bond on Thursday.

“I’m just in shock about how much they’re funding,” said a syndicate banker.

A syndicate official at one of the leads said that the trigger for RBC’s Kangaroo deal was the same as that for its euro covered bond, in that the issuer, having registered its programme under the legislative framework, is responding to demand that has been pent-up for a long time.

RBC’s euro issue was the first Canadian benchmark covered bond in that currency for more than four years, as the basis swap and other factors had previously conspired to make issuance in euros unattractive, with Canadian issuers focussing on the US market.

However, moves in the basis market have made international markets more competitive versus US dollars than has been the case historically, said the lead syndicate official.

He said that the 55bp over area was roughly in line with US dollar funding levels for RBC.