Canadian Imperial Bank of Commerce (CIBC) reopened euros today (Thursday) with its biggest ever euro benchmark covered bond, a €2.5bn four year that drew over €3.5bn of demand, with the defensive maturity and 2.5bp new issue premium contributing to a “convincing” result.

CIBC’s euro benchmark is the first since Argenta Sparbank and Crédit Mutuel on Wednesday of last week (23 February) issued €500m seven year and €2bn five and 10 year transactions, respectively. Today’s new issue comes after Bank of Montreal and Bank of Nova Scotia yesterday (Wednesday) sold the first benchmark covered bonds in a week, in sterling and dollars, respectively.

“Every day, the market is starting to feel a bit better, just starting to ignore the situation a little bit,” said a syndicate banker involved in yesterday’s issuance. “We’ve got to carry on, and covered definitely seems to be the way to go, given the three deals coming through.”

CIBC leads CIBC, DZ, HSBC, SG and UBS opened books with initial guidance of the 10bp over mid-swaps area for the March 2026 euro benchmark, expected ratings triple-A. After an hour and 35 minutes, they reported books above €1.75bn, and after around two hours and 50 minutes, they set the spread at 6bp on the back of books above €2.75bn, including €85m of joint lead manager interest. The deal was ultimately sized at €2.5bn (C$3.53bn) on the back of more than €3.7bn of orders, pre-reconciliation, and the final book good at re-offer was above €3.5bn, including €90m of JLM interest.

The size of the new issue is approaching the €2.75bn size Bank of Montreal (BMO) achieved pre-Ukraine on 17 January, which made that the largest euro benchmark since 2006.

“It was definitely a brilliant performance,” said a syndicate banker at one of CIBC’s leads. “We knew from CIBC that they were open to size, and we felt at the beginning that €2bn at 6bp would have been a massive achievement.

“But all of sudden you had almost €3.6bn happy, willing and able to digest this CIBC issue at plus 6bp, and it would have been a shame to stop at €2bn – luckily enough, the issuer was in the position to deliver a bit more and this resulted in the €2.5bn. It was pretty convincing.”

CIBC’s re-offer level of 6bp is the same at which BMO priced its €2.75bn five year and Royal Bank of Canada also priced a €2bn five year in January, while National Bank of Canada and CCDJ were able to price smaller, €1bn and €750m five year deals, respectively at 5bp. The lead syndicate banker put CIBC’s new issue premium at around 2.5bp, based on fair value of around 3.5bp, with CIBC’s October 2026s quoted at 4bp.

He said the shorter maturity chosen reflected prevailing market conditions.

“For the time being, the shorter, the better,” said the lead banker, “obviously because of geopolitics, macroeconomics, inflation expectations and everything, which favours a more defensive approach.”

Unlike several of its compatriots, CIBC had not yet tapped the euro market this year, but sold a $2.5bn five year in January after a £1bn four year FRN in December. Its last euro benchmark was a €1bn five year deal (the October 2026s) in September.

Further euro supply could emerge as early as tomorrow (Friday), suggested another banker, with issuers and investors aware that primary market windows can be fleeting and opportunities therefore need to be grasped.

“The market is clearly open,” he said. “You’ve just got to pay up a little bit, between 3bp and 5bp depending on which currency you look at and what size you want to take.

“If you go short enough and put enough juice on it, investors are turning up.”

He suggested further supply would come from outside Europe, with many Eurozone issuers already having issued this year, but a variety of Asia-Pacific names yet to launch benchmarks – and Canadians potentially ready to follow in each other’s footsteps again.

“There are a few Europeans looking,” added the banker, “but I don’t think there’s huge supply coming our way in terms of European issuers.”

Banco BPM has a mandate outstanding for a €500m five year green OBG debut, while Hypo Noe has mandated banks for a €500m seven year, both having been announced on Wednesday of last week (23 February).

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Any issuance is expected to remain focused on short to medium maturities, with even 10 years remaining very tricky, suggested another syndicate banker.

“The long end is a bit of an ugly part of the curve,” he added.

Bank of Nova Scotia priced its $2.25bn (€2.03bn, C$2.86bn) five year Reg S/144A issue late yesterday European time. The new issue was priced at 58bp over SOFR mid-swaps, inside initial price thoughts of the 60bp area.

A syndicate banker at one of the leads put fair value in the context of 55bp-56bp, implying a new issue premium of 2bp-3bp, in the middle of different levels cited by bankers away from the leads.

The lead banker said that the $2.25bn size was beyond expectations, with a $1.5bn-$1.75bn anticipated at the outset. He noted that dollars made sense for BNS given that in January it issued a dual-tranche covered bond transaction taking in euros and sterling, comprising €1.25bn long eight and £1.3bn four year trades.

Bank of Montreal approached the sterling market with its £600m five year Sonia-linked deal after having issued its €2.75bn five year in January.

A lead banker said the spread of 40bp compared with fair value in the high 30s, with the new issue premium around 3bp.

Like BNS’s, BMO’s trade was said to be larger than expected, with a £500m rather than £750m-£1bn size anticipated. The lead banker said that while a three year FRN could have been sized larger, the issuer was not prioritising a greater volume.

BNS’s last sterling benchmark was a £1.5bn five year FRN in September and while the issuer could have chosen to access the dollar market on this occasion, the sterling market offered better arbitrage, according to the lead banker.