Royal Bank of Canada sold the joint-largest, tightest benchmark US dollar covered bond of the year yesterday (Monday), pricing a $1.75bn issue at 93bp with a minimal premium, and a lead said the deal came roughly flat to what the Canadian issuer would have been able to achieve in euros.

The new issue is the third benchmark US dollar covered bond in a week, following a Toronto-Dominion $1.75bn five year that was priced at 95bp over mid-swaps on Monday of last week (7 March) and a National Australia Bank $1.4bn five year priced at 97bp on Wednesday.

Bankers had said that interest in the market was increasing because of the attractive funding levels on offer to international issuers, after only two benchmark dollar deals earlier in the year, for Kookmin and Westpac.

Royal Bank of Canada leads Goldman Sachs, HSBC, RBC and TD launched the Canadian bank’s five year issue with initial price thoughts of the mid-90s over mid-swaps on the European open yesterday, before moving to guidance of 93bp after the US open. The deal was then re-offered at 93bp and the size fixed at $1.75bn (Eu1.57bn, C$2.32bn). The size of the order book was not disclosed.

Bankers noted that the deal had been priced tighter than any of the previous dollar supply this year, and was the joint largest issue alongside Toronto-Dominion’s.

“We are very pleased with this result,” said a syndicate official at one of RBC’s leads. “In terms of the sizing and the price, this is at the upper end of the issuer’s expectations.”

The lead syndicate official noted that TD’s March 2021s were quoted at 94bp, bid, and said RBC had been able to print inside its Canadian peer as its deal had been an SEC registered issue and able to reach a wider range of investors, whereas TD’s was 144A.

He said RBC’s deal also offered a minimal new issue premium, seeing the issuer’s October 2022s at 87bp, bid.

He added that the deal had come roughly flat to what RBC would have been able to achieve in euros, with the spread of 93bp equivalent to a euro spread of around 19bp and with RBC’s Eu1.5bn March 2021s quoted at 19bp, mid.