CCDQ sold its first benchmark covered bond in over a year today (Thursday), attracting over Eu1.3bn of orders for a Eu1bn five year, and bankers said the deal was appropriately priced against secondaries, which for Canadian issuers have widened in line with the overall market repricing.

Caisse Centrale Desjardins du Québec (CCDQ) announced a mandate for the new issue yesterday afternoon, after completing a European roadshow last week and updating programme documentation following the announcement of its third quarter results last Friday.

Leads Barclays, DZ, Natixis and RBS launched the deal with guidance of the 25bp over mid-swaps area. By around one hour and 20 minutes after the books opened the leads had taken over Eu1bn of orders, before the guidance was revised to the 22bp area plus/minus 1bp with books in excess of Eu1.3bn. The spread was then set at 22bp and the size fixed at Eu1bn (C$1.42bn).

“Everything about this was well done,” said a syndicate official at one of the leads. “It was prepared well, with a successful roadshow, and the timing was good, with the market now at a convenient level for investors.

“We had the repricing of all market segments in October, and now we are back at much more appealing levels versus secondary curves or underlying government bonds. Relative value is much improved, and that was one element in the demand we received.”

Syndicate officials noted that the deal was priced wider than the most recent Canadian supply, with the last Canadian euro benchmark a Eu1bn seven year issue for Bank of Montreal that was priced at 17bp over mid-swaps on 14 September. They said this reflected a credit differential between CCDQ and other Canadian issuers and the widening of spreads in the meantime, however.

“Optically this looks cheap,” said a syndicate official away from the leads. “But actually the level is fair compared to where outstanding Canadian names are trading.”

Another syndicate official away from the leads agreed.

“At the start this looked generous, but they got to the right place in the end,” he said.

Lead syndicates officials saw CCDQ October 2019s quoted pre-announcement at 14bp, bid. Five year paper from Canadian peers Bank of Montreal, Bank of Nova Scotia and Royal Bank of Canada were also in a 12bp-15bp range on the mid yesterday, according to the leads.

The lead syndicate official said the deal therefore offered a new issue premium of 4bp-5bp, which he said was smaller than premiums paid by the most recent non-Eurozone deals.

“That is a good result,” he said.

The deal is CCDQ’s first benchmark covered bond since a Eu1bn five year priced in October 2014.