Toronto-Dominion Bank printed the largest ever euro benchmark covered bond transaction today (Monday), a €5.5bn deal split into one floating and two fixed rate tranches, after building the biggest ever book, above €11bn at re-offer, while Crédit Agricole Italia extended out to 12 years.

TD leads Commerzbank, ING, IMI-Intesa Sanpaolo, Natixis, Santander, SG and TD went out with the triple-tranche Canadian trade this morning, starting at guidance of the three month Euribor plus 42bp area for a three year (February 2027) floater, the mid-swaps plus 51bp area for a five year (February 2029) fixed tranche, and the 63bp area for a 10 year (February 2034) fixed tranche, each for a euro benchmark size and with expected ratings Aaa/AAA/AAA (Moody’s/Fitch/DRBS). After around an hour and 10 minutes, they reported combined books above €5bn, excluding joint lead manager interest, and after around two hours and 50 minutes, with aggregate demand above €10.35bn, the spreads were set at 35bp, 43bp and 56bp, respectively. The tranches were ultimately sized as €2bn for the three year FRN, €2.5bn for the five year fixed, and €1bn for the 10 year fixed, with the final books of above €4.25bn (including €125m of JLM interest), above €5bn (€250m), and above €1.9bn (€200m), totalling €11.15bn.

The new €5.5bn (C$8.1bn) deal surpasses a €5bn dual-tranche (€3.5bn threes and €1.5bn sevens) fixed rate deal TD issued in March 2023, which was at the time the equal-largest euro benchmark. The Canadian bank previously issued a three-tranche transaction including fixed and floating rate tranches in August 2023, a €3.25bn transaction split into €1.5bn fixed and €750m floating rate three year tranches alongside a €1bn eight year piece.

The deal is also the first Canadian euro benchmark of 2024, and the first since TD’s August three-trancher, with supply from the jurisdiction having fallen off dramatically after a bumper couple of years.

“I was sad not to be on it,” said a syndicate banker away from the leads. “It was a trade that was bound to go extremely well – there has not been a thing for some six months when it comes to Canadian euro paper. Everyone was asking for it in the street, all the investors – they cannot find anything in secondary.

“It doesn’t surprise me that you have a €5bn book on the five year but ‘only’ €2bn on the 10 year,” he added. “And we have know from standalone FRNS that you’re able to save some basis points from the three month-six month basis, which they did today.”

Another syndicate banker away from the leads said it had gone even better than he had expected.

“It was super-successful and surprised me to the upside, I have to confess,” he said. “Our indications in terms of starting level were spot on, but we did not foresee a tightening potential of 7bp-8bp on each of the tranches, bearing in mind how chunky their deals can be – we expected moves of 5bp.

“So the impressive aspect of the deal – apart from its sheer size – was that they got both: tonnes of euros under their belts but at the same time driving each of the tranches so much tighter. I believe this ticks every box TD might have dreamed of – and investors also appreciated it, as they didn’t lose any meaningful demand from start to finish.”

According to pre-announcement comparables circulated by the leads, TD’s September 2026 FRN was trading at a discount margin of 28bp, while its September 2026s were at 29bp, its March 2030s at 48bp and September 2031s at 50bp. The latter syndicate banker saw the new tranches either flat or slightly through fair value, while noting that fair value is particularly difficult to calculate at the short end given varied trading levels among much Canadian issuance there.

Meanwhile, only Royal Bank of Canada had previously issued a euro benchmark covered bond of 10 years or longer from Canada.

After a mandate announcement on Friday, Crédit Agricole Italia leads BBVA, Crédit Agricole (global coordinator), IMI-Intesa Sanpaolo, LBBW and RBI this morning opened books with initial price thoughts of the mid-swaps plus 90bp area for a March 2036 OBG euro benchmark, expected rating Aa3. After around two-and-a-quarter hours, they set the final terms as €1bn at 85bp on the back of books above €3.5bn, excluding JLM interest. The final book reached more than €4.6bn, excluding JLM interest.

“The issuer is very happy with the execution and the result,” said a syndicate banker at one of the leads. “We had fair value in the context of minimum 83bp, maximum 85bp, and they were able to get a €1bn trade at 85bp with a €4.6bn book.

“Even though it did a €500m nine-and-a-half year trade in January,” he added, “Crédit Agricole Italia is one of the names that is known for issuing in the long end, and clearly a lot of investors feel quite comfortable with the credit in that part of the curve.”

According to pre-announcement comparables circulated by the leads, the issuer’s July 2033 paper, issued in January, was trading at 78bp, mid, while Iccrea Banca March 2032s sold last Tuesday at 80bp were seen at 77bp. The lead banker said that, depending on how you extrapolate the curve from its 2033s, fair value was seen in the low or mid-80s.

“Telling the market Crédit Agricole Italia was going to be back with a 12 year really allowed us to get some very precise indications of interest from investors, which was very helpful in designating the right starting point,” he added. “We could therefore take into account complaints from investors around the amount deals have been travelling between starting and landing.

“So we started tighter, but limited the move to 5bp, showing a sensible approach to pricing – you nonetheless have an issuer achieving an elevated oversubscription level and raising €1bn of 12 year funding 38bp inside BTPs.”

Crédit Agricole Italia’s new issue is the longest dated OBG to have been issued since the reopening of the Italian market in June 2023 after transposition of the EU covered bond directive, and since the issuer sold a €500m 20 year in January 2022.

Two further euro benchmark mandates were announced today, with both expected to be launched tomorrow (Tuesday).

The mandate for a €500m no-grow November 2028 mortgage Pfandbrief for BayernLB was announced this morning, with BayernLB, Deutsche, ING, Natixis and UniCredit as bookrunners. And the mandate for short 10 year mortgage Pfandbrief benchmark for Erste Group Bank hit screens this afternoon, with Erste, Helaba, ING, IMI-Intesa Sanpaolo, Nykredit, RBC and UniCredit as joint leads.