Toronto-Dominion Bank launched a $5bn (Eu3.55bn) covered bond on Wednesday, the largest ever US dollar denominated covered bond. The euro market looked more stable this morning, but syndicate bankers were still uncertain about when it might reopen.

Issues for $2bn each for CIBC and Bank of Nova Scotia were the next largest Canadian deals in US dollars this year. Bank of Nova Scotia in 2010 issued the largest US dollar denominated covered bonds (a $2.5bn three year and a $2.5bn five year) to have hit the market since its post-crisis reopening at the start of last year.

TD yesterday priced a $2bn three year issue at 26bp over mid-swaps and a $3bn five year at 44bp over. The pricing of each tranche was tightened from initial guidance, with joint bookrunners Barclays Capital, Deutsche Bank, Royal Bank of Scotland and TD Securities having set this at the 27bp over area for the three year, and the 45bp over area for the five year.

The issuer paid about a new issue premium of about 7bp, according to syndicate bankers.

“The arbitrage is there,” said a syndicate official away from the leads.

He added that he had heard the order books were quite large.

Another syndicate banker away from the leads called the TD deal “sensational”.

“It was painful not to be involved,” he said.

“It’s a highly rated bank with an airtight product,” he added. “It’s so highly rated that it looks cheap in comparison to other triple-A rated covered bonds.”

A resumption of euro benchmark supply was still most likely to occur in about two weeks’ time, said syndicate officials, even with the market backdrop being generally stronger.

“We don’t have any national champions in the works this time,” said a syndicate official. “My guess is that we need to wait for the market to stabilise for a while before coming to the market.

“Depfa, CM Arkéa and Terra BoligKreditt probably want to wait for a really good market.”

Deutsche Pfandbriefbank, Credit Mutuel Arkéa and Terra are among issuers that have either completed or are still on roadshows.

Another syndicate official also said the timing was still tricky.

“I’m not convinced it’s going to be straightforward to jump through a window,” he said.

“Yesterday was a reasonable day and we’re seeing some degree of stability feeding through today,” he added. “But there are still a lot of potential minefields.”

The European Central Bank is today holding a monthly policy meeting and a syndicate banker highlighted an auction of Italian government bonds on Tuesday as an event to watch.