Bank of Nova Scotia sold the biggest single-tranche euro benchmark covered bond in over 20 months today (Wednesday), a €1.75bn six year trade that underlined the buoyancy of the market going into year-end for issuers keen to beat the likely New Year rush.

Following a mandate announcement yesterday (Tuesday), Bank of Nova Scotia (Scotiabank) leads Commerzbank, HSBC, ING, Natixis and Scotiabank opened books for Bank of Nova Scotia’s euro-benchmark sized December 2027 trade, expected ratings triple-A, with initial guidance of the mid-swaps plus 10bp area. After around 50 minutes, they reported books above €1.5bn, excluding joint lead manager interest, and after around two and a half hours they set the spread at 6bp on the back of orders above €2.2bn, including €105m of JLM interest. The deal was ultimately sized at €1.75bn on the back of more than €2.4bn of orders, including the JLM interest and pre-reconciliation.

“Getting a €2bn-plus order book on the eighth of December is no mean feat, whatsoever,” said a syndicate banker away from the leads.

The €1.75bn (C$2.5bn) trade is the largest single-tranche euro benchmark since a €1.75bn five year deal for Crédit Mutuel Home Loan SFH on 2 April 2020, and the biggest euro benchmark since a €1.75bn issue for Toronto-Dominion in April 2019.

Today’s euro benchmark caps a strong end to the year for euro covered bond supply, with four of just 10 €1.5bn-plus covered bonds to have been launched this year having hit the market since 23 November, taking 2021 issuance above €95bn and comfortably past 2020’s total.

Most recently, ING last Wednesday sold a €1.5bn 10 year deal at a 1bp new issue premium on the back of more than €1.9bn of orders, and a banker at one of Scotiabank’s leads said that recent supply had shown the market to be very receptive.

“The decision to move was really inspired by the fact that the market is buoyant,” he said. “Investors have got money to put to work, and it enables you to not get involved in the January covered bond rush that we’ve historically seen.

Heavy seasonal sovereign and SSA supply is expected in January alongside the covered bond issuance, while an overall pick-up in bank funding is anticipated.

“We announced the deal yesterday really just to put a marker in the sand,” added the lead banker, “as well as ensure that books opened with momentum and gusto, which they did. It’s a great trade with a very high quality order book.”

Bank of Nova Scotia’s jumbo euro trade comes three months after it issued a €1.5bn eight year, and two months after it sold the largest ever single-tranche US dollar covered bond, a $3.5bn (€3.01bn, C$4.42bn) five year on 4 October.

“The six year tenor was chosen to complement the eight year they did earlier in the year and it’s a good maturity profile fit,” said the lead banker, “while more broadly it complements the two sterling trades and the swashbuckling record-breaking dollar trade they also did.”

Bankers at and away from the leads put the new issue premium at 1bp.