CIBC priced its fourth Kangaroo issue on Friday, its second benchmark covered bond off a new legislative programme that an official at the issuer said it wanted to introduce to another of its key markets, although the US is unlikely to be a focus until Q1 2014.

The Canadian bank was one of three issuers from across the world to tap the benchmark markets on Thursday with a covered bond after the US Congress reached a last minute agreement to increase the debt ceiling on Wednesday, with CIBC’s choice of the Australian dollar market meaning it had opened order books before the euro market opened, where Italy’s Banca Carige and New Zealand’s ASB Finance were active in covered bonds the same day.

CIBC’s deal was its first Australia-targeted covered bond since July 2011. Leads CIBC, HSBC, NAB and UBS began marketing a A$500m (Eu352m, C$496m) long three year floating rate note at initial price thoughts of the 55bp over BBSW area before pricing the deal at 52bp over after gathering more than A$1.1bn of orders. The order books were closed early Friday morning Sydney time.

Seventeen accounts participated. Australia took 78%, Asia 19%, and Europe 3%. Bank treasuries were allocated 90%, asset managers 8%, and insurance companies 2%.

Wojtek Niebrzydowski, vice president, treasury at CIBC, said that the deal was consistent with the issuer’s plans to introduce its new programme to its key markets after it was structured to comply with Canada’s new covered bond legal framework. “We spent four days from 1-4 October meeting with investors and based on the general high level of interest and the economics being comparable to better than in US dollars and euros we decided to do a deal,” he said, adding that the Australian market was also a good fit because CIBC does not have large funding needs and a benchmark in that market starts with A$500m.

The Kangaroo issue is CIBC’s second benchmark covered bond off the issuer’s new programme, coming after a Eu1bn five year deal at the end of July.

At 52bp over BBSW, CIBC’s A$500m deal came 2bp-3bp inside to flat to where it would have sold a hypothetical comparable new issue in US dollars, depending on how one values the difference between a fully SEC registered issue and a 144A transaction, according to Niebrzydowski.

Royal Bank of Canada issues SEC-registered covered bonds, and Bank of Montreal and Bank of Nova Scotia have received approval for the public issuance format, but CIBC is not currently pursuing SEC registration and would therefore be using the 144A private placement format in any US-targeted issuance.

This is not on the cards for the near future, however, according to Niebrzydowski.

“The other key market that remains for us to tap with our new legislative programme is the US,” he said, “but we have negligible funding needs for the remainder of the year so it doesn’t make sense for us to go to the US given that the expectation there is for liquid deals to be for at least US$1bn.

“It’s something that I expect we would look at in the first quarter of next year, but it depends on how our funding needs develop.”

Niebrzydowski said that Friday’s deal was largely comparable with the issuer’s previous three Kangaroo covered bonds in terms of investor take-up, even though it was the first off its legislative programme.

“Historically the lack of legislative backing didn’t matter in the US and Australian markets, so I don’t think having it now mattered much,” he said, “notwithstanding that every account we met got a full update and some questions were asked.”

The biggest difference with CIBC’s previous Kangaroo issuance was that there was a greater share of bank balance sheets among allocations in its most recent deal, according to Niebrzydowski, who said that this could reflect greater clarity in terms of liquidity requirements under Basel III since CIBC’s last Kangaroo in July 2011.