TD sold a thrice-subscribed Eu1bn seven year covered bond today (Wednesday) that was priced flat to secondaries, according to some bankers, highlighting a convergence of non-Eurozone spreads. BNS meanwhile printed the largest US dollar covered bond since 2012 yesterday, a $2.5bn five year.

Canadian issuers had sold some Eu7.75bn of euro-benchmark covered bonds this year prior to TD’s new issue, the last a Eu1.5bn five year for Bank of Montreal at 14bp over mid-swaps on Tuesday of last week (12 April).

“There’s been a lot of supply from Canada recently, but that doesn’t seem to have been an issue today,” said a banker. “It’s a very strong response that underlines the strong bid for Canadians and non-Eurozone supply in general.”

Toronto-Dominion leads BNP Paribas, Crédit Agricole, TD and UBS launched the seven year issue with initial price thoughts of the 23bp area. Guidance was then revised to the 20bp area and the size set at Eu1bn (C$1.44bn) no-grow on the back of over Eu2.5bn of orders. The deal was then re-offered at 17bp, with the book closing at over Eu3bn.

“With 6bp of tightening and a Eu3bn book, it’s a very, very good print,” said a syndicate official away from the leads.

Some syndicate officials said the deal offered no new issue premium based on the bid side of Canadian issuers’ secondary curves, seeing TD April 2022s at 15bp, bid, and BNS March 2023s at 18bp.

“It’s a really minimal concession,” said one.

Bankers said the deal also highlighted a growing distance between UK covered bond spreads and those of other non-Eurozone issuers, which have at the same time converged. They noted that TD’s new issue came 11bp inside the 28bp level at which the last seven year benchmark from the UK was priced – a Eu1.25bn Lloyds issue – and just 1bp wider than the last Nordic seven year benchmark – a Eu1.5bn DNB Boligkreditt issue.

“That differential to the UK names is probably the highest it has been,” said one. “Of course the UK names are wider because of Brexit, but it’s still a very good outcome for the Canadians.”

Syndicate officials away from the leads said the spread of 17bp was equivalent to a spread of around 78bp over dollars.

“That means, if you look at where BNS priced their dollar five year yesterday, TD basically got their two years of curve extension for free,” said one.

Bank of Nova Scotia leads BAML, HSBC, JP Morgan, Scotiabank and UBS priced the Canadian bank’s five year SEC-registered issue yesterday at 78bp over mid-swaps, fixing the size at $2.5bn (Eu2.2bn, C$3.18bn). The deal was launched on the European open yesterday morning with initial price thoughts of the low 80s.

The deal is the largest US-dollar denominated benchmark covered bond since September 2012, when RBC sold a $2.5bn five year SEC-registered issue.

“It went very well,” said a syndicate official away from the leads. “Clearly they got some pretty large orders, and you’d expect this will be popular with bank treasuries and the like.

“Canadians are popular at the moment.”

The new issue is also the tightest priced benchmark US dollar covered bond since October, when RBC priced a $1.75bn five year issue at 72bp. Each of the previous dollar benchmarks sold this year were priced in the 90s, with a $1.75bn five year issue for RBC on 14 March the tightest, at 93bp.