CIBC began taking orders for a long three year fixed and/or floating rate Australian dollar covered bond today, targeting a minimum issue size of A$300m (Eu199m, C$298m) and receiving a strong early response, with books over A$400m.

Canadian Imperial Bank of Commerce (CIBC) leads CBA, CIBC, HSBC and NAB launched the December 2020 fixed and/or floating rate issue with initial price thoughts of the 55bp area over swaps and/or three month BBSW.

The leads announced this morning that the book had seen “strong growth” with demand in excess of A$400m, skewed towards the FRN, while guidance remained unchanged. The deal is expected to be priced tomorrow, Sydney time.

A syndicate banker away from the leads said the initial price thoughts were equivalent to a level of the high 30s over US dollar Libor. He said this is cheap relative to where a new US dollar covered bond for CIBC would be priced, noting that CIBC US dollar 2020s trade at around 30bp, mid.

“It seems they’re willing to pay a bit more to get that diversification into the Aussie market,” he said.

The Canadian bank’s new issue comes after Singapore’s DBS Bank priced a A$900m three year covered bond last Thursday, comprising a A$750m floating rate tranche and a A$150m fixed rate tranche. The tranches were priced at 51bp over BBSW and 51bp over swaps, respectively.

CIBC last issued a benchmark Australian dollar covered bond in April 2016, a A$400m five year FRN.