Caisse centrale Desjardins du Quebec launched the first and possibly only euro benchmark covered bond of the week this (Wednesday) morning, a Eu1bn five year issue that attracted solid demand to price 2bp wide of where Canadian peer CIBC sold a similar deal last week.

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A deal for CCDQ had been expected after the issuer held a roadshow that finished on Friday of the week before last (3 October), with the hiatus between that and today’s launch explained by the finalisation of some documentation issues, according to a syndicate official at one of the leads.

Bookrunners Barclays, Crédit Agricole and DZ Bank – with Desjardins as joint lead – went out initial price thoughts of the mid-single-digits over mid-swaps this morning and by 9.45am London time had taken almost Eu1.5bn of indications of interest. Guidance was then set at the 3bp area over mid-swaps and, with books over Eu1.6bn, at 11.30 pricing was fixed at 2bp over and the books set to close at 11.45.

Canadian Imperial Bank of Commerce priced a Eu1bn five year deal flat to mid-swaps on Wednesday of last week (8 October) and syndicate officials away from the leads said that CCDQ at 2bp over looked fair relative to this.

“It’s around what I and the market would have expected,” said one. “The issuer is not as well known as CIBC to European investors and there is a distinction in where their outstandings trade.”

“In light of that, 2bp over and a Eu1.6bn book for a Eu1bn size is a solid trade.”

Another syndicate official away from the leads said that the spread of plus 2bp was fair given that CIBC had come at mid-swaps flat and was today trading at less 1bp to 2bp, mid.

“It’s a fairly decent result,” he said. “The deteriorating market conditions have not harmed it and it looks like their roadshow paid off.”

A syndicate official at one of the leads said that the ultimate 2bp level was anticipated from the outset, with CIBC’s level in the back of their minds and CCDQ’s only other outstanding euro benchmark, a March 2019, bid at 1bp over. He said that the extension to the new five year maturity was worth around 1bp in the current environment.

CCDQ’s March 2019 issue was launched in March and some market participants said they were surprised that it had opted for another five year deal so soon afterwards, with the issuer understood to have also been open to issuing a seven year.

The lead syndicate official said that the choice of the five year maturity was simply the result of a combination of the issuer’s preference and investors’ feedback.

“Investors aren’t worried about oversupply in the five year maturity in the current market,” he added.

Syndicate officials spoken to by The CBR said that they were not expecting further euro benchmark issuance this week, although one said that a couple of Eurozone issues could be expected next week, while another noted that Coventry Building Society is expected after having yesterday announced a roadshow that is due to end on Tuesday.