Canadian Imperial Bank of Commerce opened 2022 dollar issuance on Tuesday with a $2.5bn five year 144A/Reg S trade that attracted some $3bn of orders and is the issuer’s largest ever benchmark covered bond, and CIBC’s Wojtek Niebrzydowski told The CBR it may remain active in the coming months.

The dollar benchmark is the first since Westpac issued a $1.75bn September 2026 deal at 45bp over SOFR mid-swaps in mid-November, with covered bonds having been absent from the dollar market in the opening week of the year as the euro and sterling markets reopened.

Niebrzydowski, vice president, treasury, at CIBC, said the relative levels of activity was a consideration when the issuer was eyeing the market in the new year.

“Euros were a possibility as well,” he said, “but dollars tend to be somewhat less crowded. Plus, there was a longer interval since we last issued dollars.”

CIBC last tapped the euro market at the end of September, with a €1bn five year, followed by two €250m taps, while its last dollar benchmark was a $2bn five year in June 2021.

Although the overall dollar market enjoyed a bumper full week of issuance last week – while Europe faced a holiday-interrupted first week of the year – the market was quieter this Tuesday, with only two other bank trades hitting the market on Tuesday New York time after the Canadian bank announced its deal Tuesday morning London time. Meanwhile, euros was experiencing its busiest covered bond day yet, with four tranches totalling €3.5bn.

Leads Bank of America, CIBC, HSBC, TD and UBS opening books on CIBC’s trade with initial price thoughts of SOFR mid-swaps plus the 50bp area for the January 2027 dollar benchmark, expected ratings triple-A. After setting the spread at mid-swaps plus 48bp, the deal was sized at $2.5bn (€2.19bn, C$3.13bn) around lunchtime New York time on Tuesday, the deal was priced and free to trade at 8am London time on Wednesday.

“This was a brilliant trade,” said a banker at one of the leads. “We announced London time to get the interest out of Asia and Europe for the global distribution and also to go into the US in a position of strength, and that panned out pretty well. We then went from SOFR mid-swaps of 50bp to 48bp the number in one step just to give the market direction, and the book held together incredibly well, demonstrating the strength of the trade, and they were able to take $2.5bn.

“We saw the new issue premium as 1bp, which is an outstanding result combined with the size.”

He saw Westpac’s September 2026s at Treasuries plus 26bp, equivalent to SOFR plus 45bp, and Bank of Nova Scotia October 2026s at Treasuries plus 29bp, equivalent to SOFR plus 46bp, with the curve out to January 2027 bringing fair value for CIBC to SOFR plus 47bp.

“We could have priced it maybe a bit tighter,” said Niebrzydowski, “but we like to show a friendly face to the investors and try not to pick up the last penny from the trade. So 48bp was the logical choice, given where we started and the size of their book and the known sensitivities in it.”

The $2.5bn issue comes after a series of jumbo dollar covered bond benchmarks since mid-2021, including CIBC’s $2bn fives and a C$3.5bn five year from Bank of Nova Scotia in October that is the largest ever single-tranche benchmark dollar covered bond.

“Dollars are probably a bit more difficult to predict than euros in terms of issuance size,” said Niebrzydowski. “We were reasonably confident that it would be well above $1bn, given what we saw last year, but it would have been a bit too optimistic to foresee that it would be a $3bn book and a $2.5bn trade.”

North America was allocated 56%, EMEA 35% and Asia 9%. Banks took 64%, central banks and official institutions 22%, asset managers 12%, and insurance companies 2%.

The deal is only the second benchmark covered bond, after Westpac’s, to be priced over SOFR mid-swaps.

“This is where IBOR reform is going,” said Niebrzydowski. “We discussed this internally and with the syndicate, and we thought we should continue with the new approach, rather than going back to something that’s ultimately likely to be discontinued.”

CIBC’s last benchmark covered bond was a £1bn four year Sonia-linked deal on 7 December and the issuer also tapped Australian dollars last year.

“The success of the new issue is testament to CIBC’s global following as well as their sensible and methodical approach to global markets,” said the lead banker.

Niebrzydowski said investors can expect to see CIBC active in other currencies in the coming months.

“In terms of funding, we look at all the currencies in all debt classes, but covereds are the cheapest option most of the time, if not all the time,” he said. “I can’t disclose what’s next and when, but we’ll likely be there.

“And we are really looking forward to hopefully being able this year to do some investor and conference work in person,” added Niebrzydowski. “Let’s keep our fingers crossed.”