Canadian Imperial Bank of Commerce (CIBC) issued a £525m five year covered bond today (Monday), pricing the deal – its first public fixed rate offering in the sterling market – flat to its outstanding FRNs in what was deemed “an outstanding show of faith” in the issuer.

The last public sterling covered bond from a non-UK issuer came on 6 March, when Toronto-Dominion sold a £250m short four year fixed rate issue. Royal Bank of Canada also sold a £550m short four year fixed rate deal in January, but CIBC had to date favoured floating rate issuance, with all four of its previous public sterling covered bonds being FRNs.

CIBC leads CIBC, HSBC, NatWest Markets and Nomura launched the new June 2022 issue with initial price thoughts of the 70bp area over the 4% March 2022 Gilt. Guidance was later set at the 68bp area on the back of books in excess of £450m, including £20m joint lead manager interest.

The spread was later fixed at 67bp with books in excess of £500m, including £20m JLM interest, and the size at £525m (Eu593m, C$870m).

“It’s an outstanding result for CIBC, being their first fixed rate sterling trade,” said a syndicate banker at one of the leads. “They looked at all different currencies when looking at the market, and actually swapped through this provided them the best execution.

“They were very focused on getting a solid transaction away, and I think the final result is an outstanding show of faith in this issuer.”

The lead syndicate banker noted that CIBC’s floating rate January 2022s were quoted at around 30bp, bid, and said the fixed rate spread was roughly equivalent to this level.

“It’s zero new issue premium, or arguably even a negative new issue premium,” he said. “That just proves that this name is extremely liked in the sterling space.

“They’re setting the standard, with this being the longest dated fixed rate sterling non-UK covered bond out there, which I’m sure helped as well.”

The deal is CIBC’s second benchmark sterling-denominated covered bond this year, following a £325m five year floating rate note that opened the sterling market on 3 January.