Toronto-Dominion Bank will price the joint-largest euro benchmark covered bond of the year today (Monday), a Eu1.75bn five year, after its inaugural legislative issue drew the most demand for a Canadian deal since a CIBC transaction in July 2013.

BNP Paribas, Credit Suisse, JP Morgan and Toronto-Dominion lead-managed TD’s euro benchmark. They went out with initial price thoughts (IPTs) of the 10bp over mid-swaps area and then set guidance at the 8bp over area, having collected more than Eu2bn in indications of interest (IOIs). With orders later exceeding Eu2.5bn, the leads fixed the spread at 7bp over. The size of the deal was subsequently set at Eu1.75bn.

At 7bp over, TD’s deal is the joint tightest Canadian euro benchmark of the year, matching pricing of a Eu1bn five year for Royal Bank of Canada in June. It is the joint-largest euro issue of the year, tied with a Eu1.75bn five year for Credit Suisse in March. In addition, the order book for TD’s issue is the largest for a Canadian euro benchmark since CIBC drew Eu3bn of demand for a Eu1bn five year priced in July last year. TD’s deal is the second biggest Canadian legislative euro issue, after Royal Bank of Canada in July 2013 sold a Eu2bn to inaugurate the country’s covered bond legislation. All other Canadian euro covered bonds priced this year have been sized at Eu1bn.

A syndicate official at one of the TD leads said that the deal came with no new issue premium and had gone well.

“The trade has been a big success, drawing high demand from investors looking to diversify,” he said.

Syndicate officials away from the leads were unsurprised by the positive investor response to the deal. One said that he expects all Canadian issuers to achieve pricing in the high single digits over, and had a similar take on TD’s deal to the lead syndicate banker.

“It has come at the perfect time as there has been a lack of new deals,” he said. “Alongside this there is the desire from investors to diversify what they hold in their portfolios.”

Toronto-Dominion Bank had its legislative covered bond programme registered with the Canada Mortgage & Housing Corporation on 26 June, becoming the last of Canada’s legacy covered bond issuers to complete this step. Today’s deal is its first off the legislative programme.