Canadian Imperial Bank of Commerce priced the first Australian dollar covered bond since September 2018 today (Thursday), a A$1bn three year floating rate note that attracted over A$1.4bn of demand and is the equal-largest outstanding non-domestic issue in the currency.

The last covered bond in the Australian market was for domestic issuer Suncorp-Metway in September. CIBC had meanwhile not tapped Australian dollars since August 2017, when it sold a A$700m long three year FRN, after having previously been a regular visitor to the Aussie market.

Given its recent absence from the market, the deal was announced yesterday (Wednesday), with execution through to today, according to a banker at one of bookrunners ANZ, HSBC, NAB and Westpac – CIBC was joint lead, no books.

Initial guidance for the Australian dollar benchmark August 2022 FRN was three month BBSW plus the 52bp area, and a first update from the leads yesterday put demand above A$575m, excluding joint lead manager interest.

With demand above A$950m, a second update set the spread at 50bp and a minimum issue size of A$500m, and a third set a size range of A$800m-A$1bn with the book above A$1.140bn. The size was ultimately fixed at A$1bn (EUR626m, C$917m) on the back of some A$1.415bn of orders.

The deal is the equal-largest covered bond from a non-Australian issuer in Australian dollars, alongside a Toronto-Dominion Bank Aussie dollar debut from 2014.

The lead banker said the deal was “right up there with the CIBC classics”. He said the Canadian issuer enjoys a good following thanks to its track record in the currency, and that there was pent-up demand due to the lack of covered bond supply.

He noted that – as in other currencies – CIBC was making good on its commitment to be a regular issuer in those markets in which it is active.

With the spread equivalent to 27bp over in dollars, according to the lead banker, the pricing was 1bp inside where TD sold a $1.75bn three year benchmark on 8 July, at 28bp over mid-swaps.

Unlike its previous Australian dollar covered bonds, the issuer in this instance was CIBC’s Sydney Branch.

“So this was very cost effective, they got the Aussie dollars they wanted, diversified their funding, and delivered on their commitment to investors,” said the lead banker, “and it was a market reopener on top of that.”