Canadian Imperial Bank of Commerce sold a Eu1bn five year covered bond at 5bp over mid-swaps today (Wednesday), pricing its deal 1bp inside a Eu1.5bn Bank of Montreal five year from last week in what is expected to be the last benchmark before a key ECB meeting tomorrow.

The European Central Bank is expected to make an announcement on sovereign QE tomorrow (Thursday) (see separate article) and, with Greek elections due this weekend, no further euro benchmark issuance is expected this week.

A slow-down in dealflow had been expected going into the second half of the week and a syndicate official away from today’s transaction said that he was surprised to see CIBC’s issue emerge, even if the prospect of supply had not been out of the question.

He also said noted that “Canadian issuers seem to have established a pattern of everyone jumping in at the same time with the same trade”. CIBC’s issue comes after a Eu1.5bn five year Bank of Montreal issue last Thursday that was the biggest covered bond of the year, while National Bank of Canada followed up a roadshow last week with a Eu1bn seven year on Monday. Bank of Nova Scotia, Bank of Montreal (BMO) and CIBC have also all issued floating rate notes in the three year part of the sterling market so far this year.

The syndicate official and others nevertheless said that the deal appeared to have gone very well, with another banker saying that it was the best of this year’s Canadian euro benchmarks. He noted that CIBC had achieved pricing 1bp inside the 6bp over mid-swaps level achieved by BMO, with that deal today being quoted at 5.5bp-6bp, bid, according to a syndicate official at one of the leads.

CIBC priced its smaller, Eu1bn issue on the back of a book reported to be around Eu1.8bn. BMO priced its Eu1.5bn benchmark after having generated some Eu2bn of interest.

A banker away from both deals noted that BMO started with IPTs of the 10bp area, which he said were probably unnecessarily wide but stopped the issuer from tightening to less than 6bp over. Leads CIBC, Commerzbank, HSBC, Natixis and RBS went out with IPTs of the high single-digits for CIBC’s deal today, before setting guidance at 6bp over and the re-offer of 5bp.

“BMO could have maybe come a bit tighter, too,” said the banker, “but it ended up going for size.”

He also suggested that the five year maturity was a good choice for the two Canadians.

“There has been a mass of seven year supply,” he said. “That has been the sweet-spot, but there is pent-up demand for five year paper from accounts for whom the shorter maturity is better.”

He said that the success of the deal showed that covered bonds outside CBPP3 eligibility were continuing to attract demand. However, another banker highlighted that, as with CBPP3-eligible issuers outside Germany, levels have backed up from what was being achieved in late 2014: CIBC on 8 October sold a Eu1bn five year issue flat to mid-swaps, which was at the time the tightest ever Canadian euro benchmark, with BNS selling a Eu1.25bn three year at minus 4bp on 28 October.

NordLB Covered Finance Bank is preparing a possible inaugural benchmark issue of lettres de gage publiques. It has mandated Commerzbank, Crédit Agricole, DZ, NordLB and UBS for a roadshow.