Bank of Montreal (BMO) sold the biggest sterling covered bond from a non-UK name in almost three years today (Tuesday), a £800m three year floating rate note, with bankers highlighting the sterling market’s competitive funding levels for international issuers.

The new issue comes a day after compatriot Canadian Imperial Bank of Commerce (CIBC) sold a £525m five year sterling covered bond that was the first public sterling covered bond since mid-May and the first from a non-UK issuer since 6 March.

Bank of Montreal leads BMO, Credit Suisse, HSBC and Lloyds Bank launched today’s floating rate note with initial price thoughts of the three month Libor plus 25bp area this morning. After 45 minutes, the leads announced that books had exceeded £500m.

Guidance was later set at the 22bp area on the back of books in excess of £1bn, for an expected minimum size of £500m. The spread was ultimately fixed at 21bp, with books around £1.1bn, before the size was set at £800m (Eu904m, C$1.33bn).

The deal is the largest sterling covered bond from a non-UK issuer since September 2014, when Toronto-Dominion sold a £900m three year FRN, and the book is understood to be one of the biggest ever built for a non-domestic sterling covered bond.

Bankers said the two Canadian deals show that the sterling market currently offers size and competitive pricing to international issuers, in both floating and fixed rate formats.

“Since mid-April, both sterling-denominated covered bond spread developments and basis swap developments have moved in favour of sterling-denominated issuance,” said Maureen Schuller, head of financials research at ING. “The half year shorter dated sterling-denominated RBC December 2021s and TD December 2021s are quoted around 15bp at the moment.

“This equates to a basis swap adjusted euro equivalent level of circa 10bp through their euro curve.”

CIBC’s £525m deal yesterday was the largest fixed rate sterling covered bond from a non-UK issuer since August 2012, when Commonwealth Bank of Australia printed a £750m 14 year.

“Whether fixed or floating, there’s clearly good, built-up demand for sterling covereds right now,” said a syndicate banker. “It offers an interesting option while the euro market is winding down.”