Royal Bank of Canada took its five year Sonia-linked issuance to £2bn in just over three months today (Tuesday), selling a new £750m deal, while euro benchmark issuance is expected to resume after a €12bn EU green bond debut, with CFF and SMTB joining the pipeline.

Following a mandate announcement yesterday (Monday), Royal Bank of Canada (RBC) leads HSBC, RBC, Santander, Scotiabank and Standard Chartered this morning went out with guidance of the Sonia plus 30bp area for an October 2026 sterling benchmark FRN, expected ratings triple-A. The leads reported books above £500m within an hour, and after two and a half hours the spread was set at 28bp on the back of books above £800m. The deal was then sized at £750m (€883m, C$1.27bn).

RBC’s latest five year Sonia-linked deal follows a £1.25bn trade on 6 July and a syndicate banker at one of the leads said the tenor represented the sweet-spot in sterling, with sterling FRN issuance becoming more challenging for non-UK names in longer maturities, shorter maturities offering little saving due to the flatness of credit curves, and the five year maturity proving efficient for the issuer from a collateral perspective.

“And issuers can get decent execution there,” he added.

The lead banker put the new issue premium at 1bp, based on RBC’s July 2026s at 26.5bp, bid, and Bank of Montreal (BMO) September 2026s at 27bp. He said the sterling level represented competitive funding versus other major currencies.

The BMO September 2026s were issued on 8 September for £1.5bn and priced at 28bp on the back of some £1.55bn of orders. The lead banker said that while RBC’s new issue was by historical standards a “neatly-sized” £750m benchmark, it also reflected the level of Canadian covered bond activity since the summer break, whereby the country’s banks have issued record amounts across various currencies.

“Across the July and this visit, RBC has ended up taking out £2bn in total,” he said, “which is significant size for the sterling covered market in isolation, and then overlay that with the other Canadian supply there has been globally.

“The sense that there is a lot of capacity for Canadian covereds is overwhelmingly a positive message for folks wanting to own those assets. But the fact that we printed £750m today is perhaps indicative of the fact that this capacity is not infinite.”

Reverse enquiries contributed to the new issue, according to the lead banker. Bank treasuries and private banks were allocated 81%, fund managers 14%, and central banks and official institutions 5%. The UK and Ireland were allocated 82%, Asia 10%, and the rest of Europe 8%.

He suggested Canadian covered bond issuance is finally set to ease off, with RBC and its compatriots heading into financial year-end at the end of this month.

Euro benchmark issuance was on pause today as issuers steered clear of an inaugural green bond from the European Union, but two new mandates were announced and supply is expected to resume tomorrow (Wednesday).

Sumitomo Mitsui Trust Bank (SMTB) has been holding investor calls today ahead of a planned seven year euro benchmark via Goldman Sachs, BNP Paribas, Crédit Agricole, Barclays, UBS and Daiwa. The deal will be only the second covered bond from SMTB, following a €850m seven year debut in October 2020.

Compagnie de Financement Foncier (CFF) is planning a dual-tranche, six and 20 year euro benchmark transaction via BBVA, Commerzbank, DekaBank, Deutsche, IMI-Intesa Sanpaolo, Natixis, NordLB and Swedbank.

According to pre-announcement comparables circulated by the leads, CFF July 2026s were quoted at minus 1bp and its November 2027s at mid-swaps flat. Caffil February 2040s were seen at plus 4.5bp and BPCE March 2041s at plus 3.5bp.

The leads also flagged a €1.5bn redemption on 12 November and noted that this is the last of more than €7bn of CFF redemptions this year.

A syndicate banker away from the new mandates – which come on top of three announced yesterday – said that while covered bond issuers had again avoided a possibly problematic clash with the EU today, the now commonplace strategy of waiting until the following day was only creating a different potential bottleneck.