A Nordic new issue is expected to emerge this (Monday) afternoon, with National Bank of Canada (NBC) having this morning announced the mandate for a European roadshow that will likely pave the way for a debut euro and legislative covered bond.

National Bank of Canada

Market participants had been expecting further Nordic supply, with the most recent European issuance having come from Stadshypotek, the week before last, and SEB on Monday of last week (28 October) in the wake of third quarter result announcements.

A syndicate official at one of the banks due to be involved in the pending Nordic deal said that market conditions are benign.

“Friday was a bit of a muted day with the All Saints holiday,” he said. “But the good thing is that the indicators show that we have been holding recent gains, with Bunds moving sideways and equities holding firm.

“We have seen much announced this morning apart from the NBC roadshow, but we will definitely see something,” he added, “probably more in the first half of the week because we have the ECB meeting approaching on Thursday.”

The two Swedish issuers each launched Eu1bn seven year deals, Stadshypotek at 9bp over and SEB at 10bp, and another syndicate official said this morning that they were trading at their re-offer spreads.

“The pipeline doesn’t feel big, but spreads are tight,” he added. “That said, there isn’t a lot of mileage in spreads so things aren’t going to scream tighter.”

National Bank of Canada has mandated BNP Paribas, Commerzbank, NBC Financial Markets and RBS to arrange a European roadshow this week, starting today.

As of this morning, the programme did not appear in the covered bond register on the website of Canada Mortgage & Housing Corporation (CMHC), which administers the Canadian legislative covered bond regime, but a banker close to the deal said that the programme was approved late last week.

Royal Bank of Canada inaugurated the new framework with a $1.75bn (Eu1.33bn) issue in July and has since launched Eu2bn seven year and Eu1.5bn five year issues in euros, with the former having been the first Canadian supply in euros in more than four years. Canadian Imperial Bank of Commerce (CIBC) inaugurated its new legislative programme via a Eu1bn five year deal at the end of July.

According to a syndicate official, CIBC’s five year was trading at 1bp through mid-swaps this morning, after having been re-offered at 9bp over, but RBC’s five year was quoted at 7bp over, after re-offer pricing of 5bp over. Its seven year had tightened only a couple of basis points from its 16bp re-offer spread, he added.

He suggested that the frequency of RBC’s issuance since July — it has also launched A$1.25bn (Eu696m) and US$2bn five year deals since then – was weighing on its spreads.

“They have done large deals and maxed out the sizes, so they haven’t traded particularly well,” he added.

He nevertheless suggested that euros remained an attractive option for Canadian issuers, who before this summer had focused for the previous three years or so on the US market.

“The euro market is looking good versus dollars,” he said, “and we might see some more Canadian supply.”

Bank of Nova Scotia (BNS) was the third Canadian bank to have a legislative programme registered by CMHC, but it has not yet inaugurated this. BNS and Bank of Montreal, which does not yet have a new programme registered, have also got clearance from the US Securities & Exchange Commission for fully SEC registered issuance, something only RBC has yet achieved.