A €5bn dual-tranche TD covered bond showed the primary market able to accommodate historically high volumes yesterday (Monday), with CFF also going its largest in a decade, while a €500m three year for RBI today demonstrated the attractions of the market for names facing headline risk.

Toronto-Dominion Bank’s €5bn (C$7.26bn) trade, split into €3.5bn three and €1.5bn seven year tranches, is the equal largest ever benchmark covered bond issue and the biggest since the global financial crisis. The €3.5bn three year tranche is also one of the biggest single tranches ever, although Germany’s Allgemeine Hypothekenbank (AHB) set the historic €5bn bar back in 1999 with a single tranche Pfandbrief.

Leads BBVA, Crédit Agricole, Deutsche, ING, Santander and TD opened books for the Canadian deal yesterday morning, with guidance of the mid-swaps plus 25bp area for the March 2026 tranche, and the 43bp area for the March 2030, expected ratings Aaa/AAA (Moody’s/DBRS). The three and seven year pieces were ultimately priced at 22bp and 40bp, respectively, on the back of more than €4.6bn and €2.2bn of orders, an aggregate book of some €6.8bn.

“It’s simply astounding how much we were able to raise,” said a syndicate banker at one of the leads.

He cited several factors as contributing to the level of demand, including a relative lack of Canadian supply this year, with only €2.75bn having been raised via two trades in euros in 2023 ahead of TD’s, compared with some €30bn last year.

“I was myself surprised to see that they have some scarcity value after having previously been among the most prolific,” he said. “Then you combine that with the coupon levels we have on our hands.”

Priced at par, TD’s three and seven year tranches were priced with coupons of 3.879% and 3.715%, respectively.

“And there was a clear target on size,” added the lead banker.

The shorter tranche was seen as offering a new issue premium of around 4bp and the longer around 6bp, which syndicate bankers noted were higher than on some recent trades, if not elevated.

Although the latest size landmark from Canada – coming after the country’s banks have ratcheted volumes higher in the past two years – has pushed the envelope higher still, the lead banker noted that the deal had already tightened in the secondary market, while a banker away from the deal said that TD’s peers should not necessarily be expected to follow suit, even if some market participants might question whether the super-jumbo is the first of many.

Compagnie de Financement Foncier meanwhile sold its biggest covered bond since a €2bn deal in 2012. Leads ABN Amro, BayernLB, CaixaBank, Commerzbank, Natixis, Rabobank and SEB sized the the eight-and-a-half year obligations foncières, expected ratings Aaa/AAA/AAA (Moody’s/S&P/Scope), at €1.75bn on the back of a €2.6bn peak order book, and tightened pricing from the mid-swaps plus 31p area to 26bp, leaving a new issue premium of around 2bp.

“We had an early go/no-go call because we knew there was supply coming in the FIG market,” said a lead banker, “and were able to take advantage of the overall backdrop. We were then able to tighten pricing nicely.”

A banker away from the leads said CFF’s trade confirmed recent appetite for French paper in the seven to 10 year part of the curve. He suggested the guidance had pointed to CFF seeking to raise a large amount, and also reflected the Eurosystem’s gradual retreat from the primary market.

“Previously these core Eurozone names could leverage the bigger ECB orders,” he said, “but here, you don’t have that, so if you want to raise €1.75bn and hence need a book well above €2bn, you need to start with something that will clearly attract investors’ attention.”

Raiffeisen Bank International (RBI) attracted some €1.5bn of orders to a €500m three year mortgage Pfandbrief, expected rating Aa1, today (Tuesday). The covered bond comes two weeks after news emerged of a US sanctions probe into the Austrian bank, which has faced headline risk since Russia’s invasion of Ukraine in February 2022 due to its eastward exposure.

“That’s reflected in the pricing,” said a syndicate banker. “They paid slightly more than others in terms of new issue premium, but of course RBI is in the press again and there is still a lot of volatility around the name.”

The NIP was variously put at 6bp to 8bp.

RBI issued three benchmark covered bonds last year, including a delayed effort in May, and a syndicate banker said that issuing another was “not necessarily RBI’s first goal”. However, he noted that the format had proven successful for the issuer, while another banker said it was fortunate for RBI that investor demand is focused on the part of the curve that such an issuer might anyway find the safest bet.

The deal was priced with a coupon of 3.875% and a yield of 3.985%, and a lead banker said that with a bit more luck, the new issue might have proven even more attractive with a 4% coupon, but that the yield available was a factor in demand.

Nationwide Building Society is expected with a five year euro benchmark tomorrow (Wednesday), in its first visit to euro covered bonds since May last year, when it sold a €500m 15 year. The new issue will be Nationwide’s shortest since a five year in May 2019, and the issuer is understood to be targeting a broad audience with the maturity, while extending funding beyond the end of the TFSME scheme.

Only one UK euro benchmark has been launched since mid-September 2022, a successful €1bn three year for Lloyds Bank on 26 January.

Bank of Åland (Ålandsbanken) issued a €250m three year covered bond, expected rating AAA (S&P), after marketing last week. LBBW, Nordea and Swedbank priced the March 2026 Finnish issue at mid-swaps plus 22bp following guidance of the 23bp area and on the back of some €410m of orders.

The Mortgage Society of Finland is set to follow with a €300m no-grow five-and-a-half year issue tomorrow.