Toronto-Dominion sold a $1.75bn five year covered bond yesterday (Monday) at a level roughly equivalent to recent Canadian euro-denominated supply, demonstrating that the dollar market offers a viable alternative for international issuers, according to a lead syndicate official.

Leads Citi, HSBC, RBC and TD priced the Canadian’s $1.75bn (Eu1.59bn, C$2.33bn) five year issue at 95bp over mid-swaps yesterday afternoon, down from initial price thoughts of the high 90s. The size of the order book was not disclosed.

A syndicate official at one of the leads said the spread was equivalent to 22bp-23bp in euros, and noted this was roughly in line with a Eu1.5bn five year issue for RBC that was priced at 21bp over mid-swaps on 27 February, while BNS priced a Eu750m seven year at 27bp on Thursday (3 March).

The lead syndicate official added that the deal offered a new issue premium of 5bp versus the issuer’s secondary curve.

The deal is only the third benchmark dollar-denominated covered bond of the year, following a $500m five year Kookmin issue priced at 95bp on 28 January and a $1.35bn five year Westpac issue priced at 98bp on 18 February. It is the first US dollar-denominated benchmark for a Canadian issuer since October, when RBC printed a $1.75bn five year.

The lead syndicate official said it was uncertain that supply in dollars will pick up after a slow start to the year, but said TD’s deal demonstrated that the market remains an option.

“The relativity versus euros within dollars makes more sense for the international funders,” said the lead syndicate official. “The ECB-supported euro market remains compelling from a relative value perspective for most core European names, but it’s very helpful for both markets to see functioning issuance in US dollars with high quality placement.

“It takes the pressure off euro issuance and demonstrates that there are alternatives.”