Toronto-Dominion issued the largest ever sterling-denominated covered bond from a non-UK issuer today (Thursday), a £1bn three year “peach of a trade” that drew over £1.2bn of orders, in a swift follow-up to a euro benchmark yesterday.

The new issue comes just a day after Toronto-Dominion (TD) issued a EUR1bn seven year covered bond. The euro deal had initially been expected on Tuesday, after the Canadian bank announced a mandate on Monday morning, but was pushed back when markets were hit by the Italian sell-off on Tuesday morning. Against yesterday’s less volatile backdrop, the issuer eventually priced the deal at 8bp over mid-swaps on the back of final demand of over EUR1.3bn.

Stability was sustained this morning – with European equities up and a rally in Italian government bonds running into its second day – and TD announced its second trade in two days.

Leads HSBC, Lloyds, NatWest and TD opened books for the three year FRN with guidance of the three month Libor plus 30bp area. The spread was then fixed at 27bp with books over £1bn, excluding joint lead manager interest, before the size was fixed at £1bn (EUR1.14bn, C$1.72bn) with books around £1.2bn at the final spread, including £25m JLM interest.

The deal is the largest sterling-denominated covered bond from a non-UK issuer. The previous record holder was another TD trade, a £900m three year FRN in September 2014.

A syndicate banker at one of the leads described the deal as a “peach of a trade”.

“You don’t often see a book north of a yard – it’s a very high quality and large book,” he added. “It’s a perfect name and trade format for this market backdrop.

“They’ve gone about this very prudently.”

A syndicate banker away from the leads also praised TD’s approach.

“On a week where other issuers have stayed on the sidelines, TD have printed two yard-sized trades in two days,” he said. “It is very impressive given the state of the market.”

The deal offered a new issue premium of around 2bp, according to syndicate bankers at and away from the leads, who cited the Canadian sterling curve. The final spread matches that of the last benchmark sterling covered bond, a £750m three year FRN for LBBW on 9 May.

The new issue is TD’s second benchmark sterling covered bond of the year, following a £500m five year FRN in January, which was priced at 22bp over three month Libor.

“They came to the sterling market in the three year format to complement the five year sterling covered bond they did earlier in the year as well as the euro covereds they’ve done,” said the lead syndicate banker.