National Bank of Canada priced a $750m three year deal yesterday (Monday) that market participants noted offered a pick-up and was also a rare instance of a 144A covered bond being sized below $1bn. BayernLB meanwhile launched a $500m Eurodollar issue.

National Bank of Canada leads BNP Paribas, Citi and National Bank Financial yesterday launched the $750m (C$945m, Eu709m) no-grow three year deal with initial price thoughts of the mid-swaps plus 30s area. Price guidance was set at 32bp and then the re-offer at 31bp. The final book size is understood to have been $1.25bn.

A syndicate official away from the leads said he thought the deal was on the generous side.

“At 31bp, they left a lot of money on the table,” he said. “I’m surprised by how defensive they were on the price given that the $750m size was set from the beginning.

“But it is good to see someone else access the dollar market,” he added.

However, another market participant said that the pricing was correct for National Bank.

“It seems to have gone well,” he said. “Notwithstanding the covered bonds’ triple-A ratings, National Bank generally trades back of the big five in dollars, so while if it had been anyone else we would have been expecting 26bp-27bp, 31bp is normal for them.”

Another banker away from the deal suggested the issuer gained a couple of basis points of arbitrage versus euros.

Apart from floating rate notes and individual tranches of larger transactions, no 144A or SEC registered dollar benchmark covered bond has been sized below $1bn in at least five years. The market participant suggested that the sizing of the issue could have taken into consideration National Bank approaching its OFSI maximum issuance level: according to a February investor report, the bank had covered bonds outstanding of C$6.40bn versus a cap of C$9.27bn, with the new issue taking its outstandings up to around C$8.27bn.

BayernLB, Citi and Credit Suisse meanwhile priced BayernLB’s $500m three year deal at 30bp over mid-swaps, in line with initial price thoughts and guidance.

The new issue comes after LBBW reopened the Eurodollar market with a $500m three year mortgage Pfandbrief at 25bp over on 26 February, which it tapped for $250m on 23 March, while Aareal Bank sold a $500m four year mortgage Pfandbrief at 35bp over on 12 March.