Canadian Imperial Bank of Commerce took sterling covered bond issuance above £3bn in three days with a £1.25bn five year Sonia-linked trade today (Wednesday) that attracted even more demand than a record-breaking £1.3bn BNS issue on Monday.

Leads CIBC, HSBC and NatWest this morning went out with guidance of the Sonia plus 32bp area for the June 2026 sterling benchmark covered bond, rated Aaa/AAA (Moody’s/Fitch). After around two and a half hours, they reported books above £1.5bn and set the spread at plus 28bp, ultimately sizing the transaction at £1.25bn (€1.45bn, C$2.14bn) on the back of a final book above £1.5bn.

The new issue comes just two days after Bank of Nova Scotia (BNS) on Monday issued the largest ever Sonia-linked covered bond and the biggest syndicated covered bond of the year in any currency, a £1.3bn five year. That was also priced at 28bp, on the back of a £1.45bn order book.

A syndicate banker away from CIBC’s leads said today’s new issue was arguably even more impressive given that it had attracted slightly more demand despite coming after BNS had taken £1.3bn out of the market – TSB meanwhile took £500m of seven year Sonia funding out of the market yesterday (Tuesday).

A lead banker said that CIBC had taken a responsible approach to following up BNS’s trade in not entering the market immediately after its compatriot yesterday morning, but instead announcing the transaction yesterday for launch today, and further waiting before going out this morning.

“That was just to make sure that Scotia was holding given it was such a big trade,” he said.

The pre-announcement also took into account that CIBC had not launched a new issue in sterling since October 2019, when it sold a £500m three year FRN that it tapped for £125m in March 2020, said the lead banker.

“It allowed the book to open with some momentum,” he said, “and it played out very nicely. The book held together really well when we went to 28bp the number, and they were able to take out £1.25bn.

“They didn’t fill their boots by sizing it too close to demand,” he added, “mindful of secondary performance.”

A syndicate banker away from the leads said it was encouraging to see the two Canadian trades go so well.

“And it suggests there is still ample liquidity,” he added, “despite all the trades that are going through.”

The three deals this week totalling £3.05bn exceed the £2bn of issuance in sterling from three trades in the whole of the rest of the year so far.

Syndicate bankers at and away from the leads said CIBC’s pricing was flat to marginally through what it might have achieved in euros.

“They can ease any pressure on their euro curve and get some nice diversification in this part of the curve without having to pay up and perhaps even getting a saving,” said one.

However, with issuers in most jurisdictions currently seeking longer dated covered bond funding in light of central bank alternatives at the short end of the curve, he does not expect much follow-on supply.