CIBC took Canadian covered bonds to mid-swaps flat with a Eu1bn five year deal today (Wednesday), moving directly to re-offer from IPTs of the low single-digits, with bankers away from the leads saying the level made sense. Raiffeisenbank is planning the first Czech benchmark.

The mandate was announced yesterday and leads CIBC, Commerzbank, HSBC, Natixis and RBS are said to have quickly taken more than Eu1.8bn of indications of interest at the IPTs of the low single-digits this morning. They then moved to a spread of mid-swaps flat for bookbuilding, without any “area” guidance, and priced the deal at flat on the back of a Eu2.3bn order book.

A syndicate official away from the lead said that flat to mid-swaps was flat to where he saw fair value, with a CIBC August 2018 bid at minus 2bp.

Another syndicate official said that the deal had gone very well and he praised the issuer’s approach to pricing.

“It seems that they did not try to pinch the last penny,” he said, “which is always good news.”

He said that he had heard some accounts had quite early on limited their orders at a certain level and that this may have explained the approach to pricing when a mid-swaps minus level was potentially achievable, suggesting that while Eu500m might have been possible through mid-swaps, a Eu1bn size was a different matter.

“There now seems to be a big difference between the bookbuilding process for Eu500m and Eu1bn deals,” he said, “and if they had tried to do mid-swaps minus maybe they risked a Eu1bn deal falling apart.”

A syndicate official at one of the leads said that there had been discussions about having another step in the pricing process, with guidance of the plus 2bp area, but that this had not ultimately been taken. He said that some investors had limited their orders at 2bp, but that this interest had only amounted to some Eu200,000.

He said that while a mid-swaps minus level was on the table, with the issuer also having the flexibility to issue less than Eu1bn, CIBC decided to be investor-friendly and do the Eu1bn at mid-swaps flat given the final Eu2.3bn order book, with allocations thus being fairer.

He said the level of mid-swaps flat compared with CIBC’s August 2018 at minus 6bp, mid, with Bank of Nova Scotia April 2019s at minus 2bp, Toronto-Dominion July 2019s at minus 2bp, and Royal Bank of Canada June 2019s at minus 3bp.

Meanwhile, Raiffeisenbank of the Czech Republic is planning the first euro benchmark covered bond from the country after an announcement yesterday (Tuesday) that it has mandated BNP Paribas and RBI to arrange a roadshow starting on Monday for a mortgage-backed deal.

The Czech bank inaugurated the first international programme for a Czech covered bond issuer in late 2012, issuing a Eu500m issue off the Eu5bn programme. (See previous coverage.)