BNS raised some €2.8bn-equivalent in sterling Sonia fours and euro long eights today (Monday) in a rare dual-currency benchmark that spread out its latest visit to covered bonds, while €1bn 15 year ABN Amro and €750m long seven LBBW trades evinced the different dynamics across the curve.

Covered bond transactions simultaneously taking in different currencies remain rare and today’s deal for Bank of Nova Scotia (BNS, Scotiabank) is the first in a combination of two of US dollars, euros and sterling since a £1bn seven year and $1.25bn three year trade for Santander UK in February 2020.

With an unusually large number of issuers employing dual-tranche strategies in euros in a busy opening to the year, the possibility of multi-currency issuance had been flagged as issuers seek to mitigate high levels of activity.

Scotiabank was particularly active in covered bonds in 2021, issuing five benchmarks from June onwards, including the equal-largest non-UK sterling deal, the largest ever single-tranche dollar covered bond, and, as recently as 8 December, the final and largest euro benchmark of last year, a €1.75bn six year.

This morning, leads Bank of America, Deutsche, HSBC, NatWest, Scotiabank and SG went out this morning with initial guidance of the Sonia plus 30bp area for a January 2026 sterling benchmark and the mid-swaps plus 12bp area for a March 2030 euro benchmark, expected ratings triple-A. After two and a half hours, they reported books above £1bn and €1bn. After three and a half hours, the spreads were fixed at Sonia plus 28bp on the back of order books over £1.3bn, and mid-swaps plus 10bp on the back of order books over €1.35bn, including €85m in joint lead manager interest. The sterling tranche was ultimately sized at £1.3bn (€1.56bn, C$2.23bn) on the back of more than £1.5bn of demand, pre-reconciliation, and the euro at €1.25bn (C$1.79bn) on orders above €1.48bn, including €85m in JLM interest.

Syndicate bankers away from the leads were impressed by the outcome, particularly given the elevated covered bond issuance of Scotiabank and its peers.

“Well done to Scotia for being the first to pull the trigger and getting a couple of good-sized transactions,” said a syndicate banker away from the leads, “and probably stealing a march on some of their rivals.

“They got good execution, and I was particularly impressed with the volume they achieved in sterling, which is indicative that the bid there continues to be extremely strong, with investors valuing the product, even if Canadian names have not been shy about issuing in that space.”

A banker at one of the leads said they went out early this morning, just before 7.30am UK time, to ensure the attention of the market.

“It was a really nice trade,” he said. “The decision to do dual currency was to take decent size in one visit without compromising on costs, and doing a four year and a long eight year was a nice kind of barbell to try to appeal to different investors.

“€2.75bn-equivalent is a very, very solid morning’s work.”

He put the new issue premium for the euro at a couple of basis points, and syndicate bankers away from the leads agreed, one citing Scotiabank’s September 2029s at mid-swaps plus 7.5bp, mid. The Canadian’s four year sterling FRN comes after National Australia Bank on 6 January sold a £1.5bn four year at Sonia plus 27bp.

Notwithstanding the successful dual-currency trade, syndicate bankers said the sheer volume of Canadian issuance across major markets would likely weigh on the performance potential of Canadian paper.

“The Canadians are big banks with big lines available,” said one, “but the last six months feels like a bit too much, too soon. Especially if with the unwinding of TLTROs the Europeans come back to the table in size, how will that pan out for the Canadians?

“I do think they are going to lag a bit price-wise and they are having to pay up a little for it, even if this was still a solid print, given the size they’ve taken.”

ABN Amro leads ABN Amro, Credit Suisse, Helaba, LBBW and Santander opened books with initial price thoughts of the mid-swaps plus 10bp area for a January 2037 euro benchmark issue, expected rating triple-A. After two hours and 45 minutes, the spread was fixed at plus 8bp on the back of books above €1.15bn, excluding JLM interest. The size was ultimately set at €1bn on the back of an unchanged book good at re-offer.

A lead banker said the outcome was in line with the more modest book sizes seen on issuance of 15 years and longer this year – Erste €1.5bn for a 15 year, then Helaba €1.3bn for a 15 year, and Caffil over €900m for a 20 year.

“If you look at the overall book dynamics, the long end continues to be solid, but not a slam-dunk,” he said. “There is cash available among investors that want exposure, but the faster money accounts we saw in the past couple of years are not to be seen.

“But if you look at the order book, it was pretty high quality, and this is an issuer who already has a lot of long dated paper outstanding, yet they were able to attract a pretty chunky book, so we are very pleased.”

He said the new issue premium was a couple of basis points, but a banker away from the leads put fair value in the context of plus 3bp-3.5bp. According to pre-announcement comparables circulated by the leads, ABN Amro January 2037s were quoted at 2.5bp, mid.

“Paying up a concession of 5bp-4bp clearly illustrates the fact that more and more investors have become cautious and perhaps are not as committal on these trades beyond 10 years,” said the banker away from the leads. “Whoever may be looking at them potentially might be running the risk of taking out slightly smaller sizes, or smaller sizes compared to the trades we saw over the course of this year.”

Indeed, another banker away from the leads said that ABN Amro’s transaction may look better with the benefit of hindsight, with the long end becoming potentially more challenging.

Landesbank Baden-Württemberg (LBBW) teed up its new issue on Friday, and leads BNP Paribas, Crédit Agricole, Erste, ING, LBBW and UniCredit opened books this morning with initial guidance of the mid-swaps flat area for the €750m no-grow July 2029 mortgage Pfandbrief, expected rating Aaa. After an hour and 15 minutes, they reported books above €1bn, excluding JLM interest. After two hours and 40 minutes, the spread was revised to minus 4bp+/-1bp, will price in range, on the back of books above €1.7bn, excluding JLM interest. The spread was eventually fixed at minus 5bp on the back of an order book above €1.2bn, excluding JLM interest, pre-reconciliation. The final book good at re-offer was above €1.05bn, excluding JLMs.

“It was definitely a tremendous result,” said a lead banker. “LBBW hasn’t been on the market as frequently lately, so there was definitely a bit of scarcity element attached to it.”

LBBW’s last euro benchmark was in June 2020, a €500m no-grow six year Pfandbrief.

The lead banker saw fair value in the context of minus 5bp-4bp, implying a flat to negative NIP.

“Granularity, especially in the belly of the curve, has been great,” he said, “with many issuers having taken advantage of that, and LBBW was no exception. Certainly, there is more cautiousness among investors of how tight this can actually go and, as always, there is just a little bit of order book deterioration when you price this aggressively. But all in all, the quality remains very solid.

“So for the time being covered bonds are definitely enjoying a bit of a hot streak – especially if you look at five, six and seven maturities, and I would dare say that even includes 10 years.”

Aktia Bank plc is planning the first Finnish benchmark of the year, a €500m no-grow short seven year covered bond, with ABN Amro, Danske, LBBW, Nordea and Swedbank as leads, according to a mandate announcement today.

Aktia Bank last issued a €500m seven year about three years ago, in February 2019.

According to pre-announcement comparables circulated by the leads, Aktia March 2026s were quoted at minus 6.5bp, mid, Danske Bank January 2028s at minus 3.5bp, OP Bank April 2028s at minus 6.5bp and its February 2029s at minus 5bp.

Crédit Agricole Home Loan SFH is expected tomorrow (Tuesday) with an 11 year euro benchmark via Crédit Agricole, Danske, Deutsche, Erste, ING, Santander and Societe Generale, following a mandate announcement this afternoon.

The French issuer last sold a benchmark in July 2021, while Crédit Agricole Public Sector SCF in November priced a €500m 10 year. Crédit Agricole Italia issued a €1.5bn dual-tranche OBG last Wednesday, comprising €1bn 10 and €500m 20 year parts.

According to pre-announcement comparables circulated by the leads, Crédit Agricole Home Loan SFH November 2031s were trading at mid-swaps flat and its February 2032s at plus 1bp.