Fédération des caisses Desjardins du Québec launched the first US dollar benchmark in over four months today (Wednesday), a $750m no-grow three year that attracted over $1.75bn of demand and achieved pricing at a comparable level to an equivalent euro trade, according to syndicate bankers.

Fédération des caisses Desjardins du Québec (FCDQ, ticker CCDJ) leads BMO, Barclays, Citi and UBS went out this morning with initial price thoughts of mid-swaps plus the high 20s for a $750m (€640m, C$1bn) no-grow three year 144A/Reg S covered bond. An initial update reported books over $850m, and the deal was ultimately priced at 25bp, on the back of over $1.75bn of demand, pre-reconciliation.

A syndicate banker away from the leads said the issuer chose a reasonable time to launch its deal given that spreads have tightened considerably in the dollar market since the peak of the coronavirus crisis. The last US dollar benchmark, a HSBC Bank Canada $1bn three year, was on 7 May priced at 72bp.

“The pricing aligns with euros,” he added, “so I can understand why they would choose to take this window. Also, they had a fairly captive market to themselves, with the US election and Brexit for now remaining as background noise.”

Another syndicate banker said the deal was destined to succeed, given it was the first US dollar benchmark in over four months.

“It’s an undersupplied market,” he said, “and bank treasuries have got money to put to work.”

A lead banker said that rather than being an opportunistic trade, the dollar trade was part of the issuer’s plans, coming after a €500m no-grow seven year issue on 17 September.

“The driver was how to get the biggest investor engagement,” he said. “We laid out the strategy months ago and today executed it successfully.”

“By issuing in the two currencies, you’re feeding both markets, so you’re not looking primarily at the cost.”

An equivalent three year euro would price at 7bp, give or take a basis point, he suggested.

“There’s no big difference,” he added.

For lower beta issuers in particular, the dollar market is “the one to beat”, he said, given its “very competitive” pricing.

“It’s fair to say that as we go into the fourth quarter, it’s more a conversation about opportunistic funding and pre-funding,” he added, “because broadly speaking, most people are done.”

CCDJ’s last dollar benchmark was a $1bn three year in November 2019.