Toronto-Dominion Bank is issuing the first Eu1bn or larger euro-denominated covered bond in more than five weeks today (Monday), a Eu1.25bn five year with what was described as a “solid” new issue premium, and SEB is expected tomorrow with its first euro since 2013.

The last covered bond of Eu1bn or more was a Eu1bn seven year for Bank of Ireland Mortgage Bank on 29 April, with volatility on the back of two sharp back-ups in Bund yields having disrupted primary market activity since then. With the exception of an underwhelming Eu750m five year Banco Sabadell issue on 29 May, only German sub-Eu1bn issuance has hit the market since April.

But bankers expect TD’s new issue this morning to have a catalysing effect on new issuance.

“We have seen a number of issuers waiting for others to take the first leap and test executability,” said a syndicate official away from today’s mandates, “and preferably someone beyond the Germans. Having now two non-ECB eligible deals should make for a broader swathe of issuers, particularly after Sabadell disappointed a bit.”

SEB has already followed up on TD’s reopener, with Commerzbank, Crédit Agricole, HSBC, Nomura and SEB mandated as leads for a seven year deal that is expected tomorrow (Tuesday).

“We are still somewhat between a rock and a hard place in the form of Greece on the one side and the volatile Bund market on the other,” said a syndicate official at one of the Swedish bank’s leads, “but it looks like the market is now finding support, which should give investors the confidence to get involved.

“We lost 10 big figures on the Bund future, and given the economic outlook we should now have found a bottom.”

TD leads BNP Paribas, Credit Suisse, Lloyds and TD attracted over Eu1.7bn of orders for its Eu1.25bn five year benchmark at 1bp through mid-swaps after having gone out with initial price thoughts of flat to 2bp over mid-swaps and then guidance of the flat area.

“No-one wanted to be the first one to brave the market,” said a syndicate official at one of the leads, “but we felt TD was the right kind of name to reopen the market and that if they paid the right price they could get a very good trade done. Given the rate back-up they could offer a 0.5% coupon, which is almost unheard of in a five year covered bond like this in something like six to nine months.

“So we were confident in being the first out there and it was the right call.”

The lead syndicate official put the new issue premium at about 5bp, seeing fair value at around minus 6bp based on mid levels of minus 9bp for TD 2019s, minus 8bp for its 2021s and minus 4bp for its 2022s. A syndicate official away from the leads put the new issue premium at the same level, but a couple of others said that it was higher, seeing tighter levels for TD and other Canadian covered bonds and consequently a new issue premium of around 7bp.

The syndicate officials away from the deal nevertheless found the new issue premium appropriate, particularly given that TD has issued two euro benchmarks, a dollar and a sterling in the past year and that it tends to issue larger deals.

“They are pretty frequent, so it was a prudent strategy,” said one. “They got a nice book.”

However, one said that he was surprised that demand had not been greater in light of what he considered “generous” pricing.

“It is nice to see a trade,” he added, “but it doesn’t change where we are from last week.”

The last Nordic euro benchmark supply was a Eu500m seven year from Sparebanken Vest Boligkreditt at 5bp through on 22 April, a week after the last Swedish benchmark, a Eu500m seven year for LF Hypotek at 4bp through.

“The last Scandi seven years went well to very well,” said a syndicate official away from SEB’s mandate. “But we are not in the same environment as mid-April so those levels might be a touch aggressive today.”

SEB’s last euro benchmark was a Eu1bn seven year in October 2013.