Caixa Geral de Depósitos issued its first benchmark covered bond in a year today (Tuesday), a Eu1bn seven year deal, as the market began slowing down ahead of a key ECB meeting on Thursday. Meanwhile, BMO launched its first sterling covered bond.

CGD leads CaixaBI, LBBW, Natixis, Nomura and Santander began with initial price thoughts of mid-swaps plus the high 60s, before setting guidance at the 65bp area and reoffering the paper at 64bp over. The leads built a book of Eu1.4bn with 90 investors, according to a syndicate official at one of the leads.

He said that the deal offered a new issue premium of around 3bp, with the issuer’s outstanding January 2019 paper quoted at around 36bp, mid, and its January 2020s at around 50bp.

A banker away from the leads put the new issue premium at around 5bp, saying that extrapolating from the 2020s – the issuer’s longest dated covered bond – to seven years implied fair value of the high 50s to the 60bp area.

“They started in the high 60s, so with a 10bp new issue premium, finishing with 5bp,” he said. “That’s in line with any of the peripheral transactions you look at recently, whether it’s Intesa, Cajamar, or others.”

However, another banker away from the leads – who agreed the pricing was fair – said that the market’s response to the transaction was less impressive than other peripheral issuers had experienced.

“In comparison with other Club Med covered bonds this one didn’t go too excitingly,” he said. “But people are still buying it, just not overenthusiastically.

“I would not be surprised if activity in the coming days pans out a little patchier,” he added.

Activity had been expected to slow ahead of a meeting of the governing council of the European Central Bank on Thursday after which a sovereign QE announcement is expected, and with Greek elections due on Sunday.

“I think that’s it, after CGD, for the week,” said a covered bond banker. “It does feel to me that, with the right noises from the ECB, the market will be open as early as Monday or Tuesday, so why plough in?”

Bank of Montreal launched its £325m (Eu424.7m, C$588.8m) sterling FRN in response to reverse enquiries arising in light of a Eu1.5bn (C$2.08bn) five year benchmark the Canadian bank sold last Thursday, according to a banker at one of the leads – Barclays, BMO, HSBC and Lloyds.

“This really is more as a courtesy to accommodate demand than a pure funding exercise,” he said.

He noted that this was a similar move to that taken by fellow Canadian, Bank of Nova Scotia, in October, when it added a £250m three year FRN to a Eu1.25bn three year benchmark, albeit with BNS adding the sterling deal on the same day as the euro.

The lead banker said that the rationale for the transaction and the issuer being well-funded limited the size of the deal. The book was over £350m and the pricing was fixed at 19bp over following guidance of the 20bp area.

Bank of Nova Scotia tapped the three year sterling FRN it launched in October for £300m on 6 January at 18bp over mid-swaps, while Canadian Imperial Bank of Commerce the following day sold a £500m three year FRN – its covered bond debut in sterling – at 19bp over mid-swaps. That £800m of supply came in between £1bn three year FRNs from Barclays and Lloyds on 5 January and Monday of last week (12 January), respectively, with sterling covered bond supply this year now at £3.125bn.