Canada’s Bank of Nova Scotia issued its inaugural euro and legislative benchmark covered bond today (Wednesday), a Eu1bn five year that will be priced at 9bp over on the back of solid demand, while Aktia Bank yesterday joined NIBC Bank on the road in preparation of targeted deals.

Leads Barclays, Deutsche Bank, HSBC, JP Morgan and Scotiabank built an order book of more than Eu1.6bn for the Canadian issuer’s first euro covered bond. Initial price thoughts (IPTs) were set at the 12bp over mid-swaps area, before guidance was set at the 10bp over area. The spread has been fixed at 9bp over.

A syndicate official at one of the leads put the new issue premium at 2bp-3bp, but said that as this is Bank of Nova Scotia’s (BNS) first euro benchmark that figure is based on an outstanding issue from CIBC, with Royal Bank of Canada outstanding deals also relevant comparables.

“This has been a successful deal, with a quality order book and good granularity,” said the lead syndicate banker.

Syndicate bankers away from the leads said that they were pleased to see the deal go well, with one noting that it showed not only that the market was in good shape, but that there was “a tone of eagerness in it”.

Today’s deal for BNS comes after the issuer’s legislative programme was approved by the Canada Mortgage & Housing Corporation in July after the introduction of covered bond legislation in Canada.

With today’s deal BNS becomes the third Canadian issuer to issue a euro benchmark covered bond this year. Caisse centrale Desjardins du Québec (CCDQ) priced a Eu1bn five year deal, also an inaugural euro and legislative issue, at 15bp over at the beginning of March. Subsequent to that deal National Bank of Canada priced a Eu1bn seven year at 22bp over on 18 March.

A syndicate official away from the BNS leads said that it “it is good to see that a Canadian issuer can get the right price”, after NBC had come with a generous spread.

He suggested Scandinavian and Credit Suisse covered bonds as comparables for BNS’ deal.

“Bank of Nova Scotia is a much bigger issuer than CCDQ, and it is a question of name recognition,” said the syndicate banker. “Fairer comparison could be made between the recent Credit Suisse and Stadshypotek deals, and I would like to see the Scotia issuance fall between these two.”

Credit Suisse priced a Eu1.75bn five year issue at 13bp over on 13 March, which was today said to be trading at 12bp over. Stadshypotek priced a Eu1.25bn five year at 5bp over on Monday.

Away from BNS, Finland’s Aktia Bank yesterday (Tuesday) started a roadshow for a euro covered bond that will finish next Thursday, 3 April, while Dutch issuer NIBC Bank has been meeting with investors since Friday in connection with a second issue of its conditional pass-through covered bond programme.

Syndicate bankers said that the market should look “enticing” for issuers.

“If you have the option, issue now, because who knows what will happen in the coming week,” said a syndicate banker. “However, if someone gets a little carried away tightening spreads, investors may step back and say ‘hold on’.”

Another syndicate banker said he expected issuance to slow down as banks enter blackout periods in early April.

“There will be a bit more senior unsecured in April as issuers will be looking at other funding options,” he added.