Leads CIBC, Crédit Agricole, DZ, Erste, Natixis and SG opened books with guidance of the mid-swaps plus 42bp area for the April 2031 euro benchmark, expected ratings Aaa/AAA (Moody’s/Fitch). After around an hour and 40 minutes, they reported books above €1.75bn, including €235m of JLM interest, and then after around three hours and 20 minutes they set the spread at 36bp on the back of some €2.4bn of orders. The deal was ultimately sized at €1.25bn, with the final order book above €2.1bn, including €175m of JLM interest.

In the latest bout of French political turmoil, prime minister Sébastien Lecornu resigned during bookbuilding for the deal, but a syndicate banker noted that the attrition upon final terms was very modest and much less than that suffered by a Commerzbank €500m five year last Thursday.

“Even though the French government crisis popped up again, there was no spillover. The volatility we were facing yesterday did not really disturb the transaction, which went according to plan, even surprisingly well.

“None of the investors said they were afraid, or tried to get an extra basis point as compensation,” added the lead banker. “There is so much cash around that investors want to put to work, and my gut feeling is that this French turmoil was priced in.”

A banker at another of the leads said a slightly larger than usual number of investors had added limits to their orders, while a few took a little longer to decide whether to stay in or not at the final terms.

“That was all a product of the volatility we had on the day,” he said, “but at the end of the day, the metrics didn’t really look any different from what they would have without the volatility.”

Lead bankers put the new issue premium at flat to 2bp, noting that as well as the secondary curve of CIBC, recent APAC supply, for example a strong Commonwealth Bank of Australia €1.25bn six year priced at 39bp on 29 September, were taken into consideration in such calculations.

The Canadian’s five-and-a-half year maturity was meanwhile chosen to differentiate it from CBA’s and other supply in the six year tenor, which was dubbed “the new five years”, as well as to better fit the issuer’s needs.

However, CIBC’s trade was bracketed with such APAC supply in its appeal to investors.

“In the covered bond market, spread is definitely key,” said the second lead banker, “and as long as you put on a little bit more spread, investors have a lot of cash to put to work, even if there is only like 12bp between a Canadian covered bond and a German Pfandbrief.”

Indeed, the first lead banker said that while fast money had not been so evident upon the post-summer primary market resumption, it was more in evidence today, as further testament to the strength of the market.

Canadian Imperial Bank of Commerce leads CIBC, DZ, HSBC, Natixis and SG opened books this morning with initial guidance of the mid-swaps plus 40bp area for the October 2029 euro benchmark-sized issue, expected ratings Aaa/AAA (Moody’s/Fitch). They ultimately priced a €1.25bn (C$1.9bn) deal at 35bp, with demand peaking above €2bn and the final book some €1.8bn, including €50m of joint lead manager interest.

Syndicate bankers at the leads put the new issue premium at around 2bp, with fair value seen at 33bp, flat to where the last Canadian five year five year benchmark was trading, a €1bn Desjardins deal issued in May. CIBC’s re-offer spread was flat to where the €2.5bn five year tranche of TD’s record €5.5bn March issuance was trading.

“CIBC hasn’t been seen in quite a while,” said a lead banker. “Meanwhile, we’ve seen tonnes of TD and a little bit of Desjardins. Because TD was supersized and its curve is super-supplied, we felt that fair value for CIBC should be at least a couple of basis points inside.”

CIBC’s last euro benchmark was a €1.5bn four year issue in March 2023.

Another lead banker said overall demand and individual tickets surprised to the upside a little, allowing the issuer to take the €1.25bn size.

“CIBC would have been happy with €1bn,” he added, “but if there wasn’t a basis point cost for an extra €250m, then fine.

“So €1.25bn at a 2bp premium – investors are happy and the issuer is happy, with very smooth execution.”

The deal hit the market early for a Monday morning and the lead bankers said this was done because of rumours of a heavy pipeline and CIBC’s intent to move ahead of any such supply.

“It didn’t feel like there was a huge amount of upside in waiting,” said one of the lead bankers. “The market’s been OK, it’s been accessible – yes, we’ve been seeing positive concessions, but if you’re OK with that, and you don’t want to run the risk of the market moving away from you, then go ahead.”

Korea Housing Finance Corporation’s social bond mandate had been announced on Wednesday, with a maturity of either long three or five years flagged. After a roadshow ending on Thursday, the leads on Friday announced that the South Korean issuer would be focusing on a 3.75 year maturity, with launch expected early this week.

They circulated comparables including KHFC March 2029s at 40, mid, as well as recent non-Eurozone issuance including DBS March 2028s at 24bp, Maybank June 2027s at 22bp, OCBC June 2027s at 20bp, Standard Chartered Singapore May 2024s at 25bp, and TD September 2027s at 25bp.

Leads Crédit Agricole, HSBC, ING, Natixis and SG opened books this morning with initial price thoughts of the mid-swaps plus 42bp area for a July 2028 euro benchmark-sized transaction, expected ratings Aaa/AAA (Moody’s/S&P). After close to around three and a half hours, the leads reported books above €690m, excluding JLM interest, and set the spread at 42bp. Around two hours and 20 minutes later, they set the size at €650m (KRW966bn) on the back of a book above €850m, excluding JLM interest, and the final book good at re-offer was later put at above €810m, excluding JLM interest.

A lead banker noted that KHFC’s investor base and line availability is much more constrained than, for example, CIBC’s, and that, in conjunction with this, spread tightening for its issuance is from the outset not expected to be as great as for more widely taken names. However, he acknowledged that a tighter spread of 40bp had been hoped for.

Mandates for Coventry Building Society and Deutsche Kreditbank hit screens today, while at least two other deals are anticipated in the near future.

Coventry is expected with a €500m no-grow five year issue, having mandated ABN Amro, BBVA, HSBC, NordLB and Santander. The leads circulated pre-announcement comparables including Santander UK March 2029s at 33bp, mid, TD February 2029s at 34bp, and Desjardins May 2029s at 33bp.

Deutsche Kreditbank has mandated a €500m no-grow 10 year social housing covered bond. BayernLB, Commerzbank, NordLB, SG, UBS and UniCredit have the mandate for the mortgage Pfandbrief.

DKB’s outstanding January 2035 social housing issue was at 35bp, mid, pre-announcement, according to the leads, while MünchenerHyp green February 2034s were at 27bp and a variety of other February and March 2034 Pfandbriefe at 30bp-33bp.

“There’s also another core European name rumoured in 10 years,” said a syndicate banker, “and some supply in the middle of the curve, but I don’t expect the issuance that is being discussed to oversupply the market.

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.

My Money Group – managed by Cerberus Capital Management – announced that its long-planned acquisition of the retail banking activities of HSBC Continental Europe (HBCE), including HSBC SFH, was finalised on Monday.

HSBC SFH has been renamed CCF SFH, with the acquiror renaming itself CCF Group, having also entered into a long term agreement with HBCE to rent and use the historic Crédit Commercial de France brand. CCF SFH will be a subsidiary of the group’s retail banking Banque des Caraibes entity, which is being renamed CCF.

The group already has its own covered bond issuer, MMB SCF, named after parent My Money Bank, a speciality finance subsidiary.

Moody’s on Tuesday withdrew its Aaa rating of the transferred covered bonds, citing business reasons, while S&P affirmed its AAA ratings but revised the outlook from stable to negative, reflecting its negative on CCF’s BBB- rating and that there are no unused notches of uplift to support the covered bond rating in case of a negative rating action on the parent bank.

Royal Bank of Canada meanwhile on 21 December received ministerial approval to proceed with its acquisition of HSBC Canada, with the deal expected to close in the coming months.

Also last month, Morningstar DBRS (rebranded from DBRS Morningstar as of Tuesday) confirmed its AAA rating of Laurentian Bank covered bonds.

It had on 30 November placed them on review with negative implications after having done likewise with the bank’s A (low) long term issuer rating. However, a mechanistic downgrade of the covered bonds would only have followed an issuer downgrade of two or more notches, and a downgrade of only one notch, to BBB (high) ensued.

The rating agency had said the AAA covered bond rating could withstand a one notch downgrade if covered bond programme overcollateralisation (OC) was increased to a level where the cover pool credit assessment (CPCA) is triple-A, and when confirming the rating on 15 December, Morningstar DBRS cited an OC level of 22.0% (based on an asset percentage (AP) of 82.0%) to which it gives credit, up from a 15.0% level (based on an 87.0% AP as at 31 October) cited on 30 November.

The rating agency on 3 November placed the A (low) long term issuer rating of Laurentian Bank of Canada (LBC) under review with negative implications.

“The Under Review with Negative Implications designation reflects DBRS Morningstar’s view that these adverse series of events in aggregate have weakened LBC’s franchise strength and future growth prospects, pressuring the credit ratings. LBC’s personal banking business, which has already had weaker earnings than its peers, has been under pressure with customer attrition, shrinking loans, and stagnant deposits in recent years.”

The bank had concluded a strategic review of options in mid-September that decided against a sale.

DBRS Morningstar said yesterday that the AAA rating of Laurentian’s two outstanding covered bonds – both Canadian dollar-denominated, totalling C$2bn (€1.35bn) – have been placed under review with negative implications.

According to the rating agency, the covered bonds will be downgraded if the A (low) long term senior debt rating of Laurentian (its covered bond attachment point, CBAP) is cut by two notches or more, while the AAA rating can withstand a downgrade of one notch if covered bond programme overcollateralisation is increased to a level where the cover pool credit assessment (CPCA) is triple-A.

Covered bond bankers were positively surprised by the reception enjoyed by the new issuance, given the time of year and difficult periods experienced in recent months.

“It’s actually a very constructive market,” said a banker involved in the latest supply, “surprisingly so, because you normally think of the second half of July as things already slowing down and activity is rare. But there have been some pretty strong trades – SG yesterday and then RBC today, and last week as well.

“Spreads have tightened quite a bit over the last few days,” he added, “especially after the US CPI. The levels are quite attractive for issuers, the fact that supply is lower helps the new issuance to perform in the secondary market, and when a new execution hits the screens, you have the spotlight for yourself, essentially.”

Leads Crédit Agricole, HSBC, ING, LBBW, NordLB, RBC and Santander announced the Canadian deal this morning and went out with guidance of the mid-swaps plus 38bp area for a euro benchmark-sized July 2028 issue, expected ratings Aaa/AAA/AAA (Moody’s, Fitch, DBRS). After around an hour and 40 minutes, they reported books above €1.5bn, including €25m of joint lead manager interest, and after around two hours and 50 minutes, they set the spread at 34bp for an expected size of €1.25bn on the back of books above €1.975bn. The size was ultimately set at €1.5bn (C$2.22bn) on the back of books above €2.075bn, with the final order book size given as above €2bn, including €25m of JLM interest.

“Happy days,” said a syndicate banker at one of RBC’s leads. “We announced an expected size of €1.25bn, giving us the flexibility to upsize, and the book held together very well and even grew after that update, when you could have expected some attrition in the book after tightening 4bp and also going inside a threshold like 35bp.

“Apparently people found the level quite reasonable, and so we were in a strong position to print €1.5bn against a €2bn book.”

Bankers at and away from the leads put the new issue premium at around 5bp, given fair value of around 29bp. According to pre-announcement comparables circulated by the leads, RBC September 2027s were at 25.5p, mid, October 2028s at 29.5bp and June 2029s at 34.5bp, while Bank of Nova Scotia January 2028s and HSBC Canada March 2028s were at 29bp and 30.5bp, respectively, and Fédération des caisses Desjardins du Québec and National Bank of Canada April 2028s were at 34.5bp and 34bp.

SG had yesterday (Monday) attracted an aggregate €5.1bn-plus of orders to its €2.5bn dual-tranche issue, the largest euro covered bond transaction since a €3bn UniCredit dual-trancher on 6 June. The final book for the French bank’s €1.25bn three year tranche was above €2.75bn and for the €1.25bn seven year tranche above €2.35bn, with both tranches tightened 5bp from the mid-swaps plus 13bp area and plus 34bp area, respectively, to 8bp and 29bp. The new issue premiums were put at 5bp-6bp for the shorter tranche and 7bp-8bp for the longer.

Syndicate bankers attributed the “super-strong” transaction to hitting the maturity sweet spot with the three year tranche, and attractive pricing in both tenors, which was deemed particularly helpful for the seven year tranche. The seven year was the longest-dated euro benchmark in almost four weeks, since a €500m eight year for Aegon on 21 June.

Coming the first working day after France celebrated Bastille Day on Friday, SG’s trade underlined the opportunities available despite the time of year. Further supply expectations are nevertheless modest.

“The pipeline is quite thin and there’s no real visibility on what might come,” said a syndicate banker. “Things could continue at the current pace, but I would expect this week to be the last before holidays really kick in, with the ECB and Fed meetings next week.”

BayernLB and Hypo Noe announced issuance plans alongside the Portuguese today (Tuesday), and the week looks set to at least match last week’s five euro benchmarks, with other candidates said to be looking at hitting the market once those already in the public domain clear.

Fédération des caisses Desjardins du Québec (ticker CCDJ) leads DZ, ING, LBBW, Natixis and RBC opened books with guidance of the mid-swaps plus 40bp area this morning for the euro benchmark-sized five year issue, expected ratings Aaa/AAA (Moody’s/Fitch). After close to two hours, they reported books above €1bn, excluding joint lead manager interest, and after around two-and-three quarter hours, they set the spread at 37bp on the back of more than €1.25bn of demand. The deal was ultimately sized at €750m (C$1.1bn), with the final book, pre-reconciliation, above €1.3bn, excluding JLM interest.

“Coming at short notice after the Easter break bore a little bit of a risk, with people maybe tired or in holiday mood,” said a syndicate banker at one of the leads, “but it went well.”

According to pre-announcement comparables circulated by the leads, CCDJ November 2027s were quoted at 30bp, and a syndicate banker at one of the leads put fair value at 31bp, implying a concession of 9bp at the 40bp guidance.

“We were mindful of the fact that there has been plenty of Canadian supply already,” he said, “and that there is most likely more to come, so you’d rather err a little on the side of caution here, and the 40bp area start was eye-catching.”

CIBC reopened the market post-SVB/CS two weeks ago with a €1.5bn four year on 27 March and Bank of Montreal issued a €2bn three-and-a-quarter year the next day, after Toronto-Dominion had on 6 March issued the equal-largest ever covered bond, €5bn split into three and seven year tranches.

“CCDJ is a particular name,” added the lead banker, “since not everyone has lines for them, but at the same time you are getting some interest here from accounts you might not get in a traditional European name, so it sort of balances out nicely.”

At the 37bp re-offer level, CCDJ’s new issue premium was 6bp.

“For €750m out of a book of some €1.3bn, this was money well spent,” said the lead banker “We are definitely happy with how it went and my impression is that the issuer is, too.

“And therefore a good start into the post-Easter session.”

Banco Santander Totta today announced plans to issue the first obrigações cobertas, the Portuguese instrument that will be a European Covered Bond (Premium) now that the country has implemented the EU Covered Bond Directive. The issuer is targeting a euro benchmark-sized five year soft bullet, expected ratings Aa2/AA-/AA (Moody’s/Fitch/DBRS), via leads Barclays, Crédit Agricole, Santander, SG and UniCredit.

The deal will be the first euro benchmark from Portugal since November 2019, when Caixa Económica Montepio Geral (Banco Montepio) issued €500m five year of obrigações hipotecárias. Santander Totta’s last euro benchmark was a €1bn 10 year in September 2017.

The bank said last month that it had received approval from the Portuguese Securities Markets Commission (CMVM) for the adaptation of its already-existing mortgage covered bond programme to the amended covered bond law, according to DZ Bank analysts, who noted it was thence the first Portuguese issuer to be ready to issue again.

Germany’s BayernLB is planning a €500m no-grow May 2029 mortgage Pfandbrief via BayernLB, Deutsche, Helaba, KBC and SG, and Austria’s Hypo Noe has mandated Erste, Helaba, LBBW, Natixis and UniCredit for a €500m no-grow five year public sector Pfandbrief.

Oma Savings Bank of Finland is meanwhile planning an expected €250m tap of its €400m November 2027 issue, which will take it to benchmark size. Danske, LBBW and Swedbank are leads.

“This all went very much in line with base case expectations,” said a syndicate banker of today’s supply. “The new issue concessions issuers had to accept are probably a bit wider than before the Silicon Valley and Credit Suisse disasters, but other than this, the market has again proven to be super-resilient to anything you throw at it.

“There are still elements of shakiness to be felt in the wider market, but when it comes to covered bonds, this market just wants more.”

Another banker said the functioning of the covered bond market should hopefully support broader FIG activity.

“It’s really good to see ongoing demand for covered bonds,” he said. “It gives the overall banking sector a boost as banks are seen to have market access.”

Stadshypotek’s €1bn five year today is its inaugural green covered bond issue, and was backed by its Swedish cover pool.

Leads Barclays, HSBC, Nomura, SG and Svenska Handelsbanken opened books with guidance of the mid-swaps plus 20bp area for a euro benchmark-sized April 2028 issue, expected rating Aaa. Orders surpassed €1.25bn after around an hour and a quarter, according to an update from the leads, and after around two hours and 20 minutes, the size was set at €1bn and the spread at 16bp on the back of more than €2.25bn of demand, excluding joint lead manager interest and pre-reconciliation.

“Congratulations to everyone involved,” said a syndicate banker away from the leads. “This was probably the most dynamic deal of the day in terms of oversubscription, €1bn out of a €2bn-plus book.

“Apparently people quite liked the deal – with its green tint, it ticked quite a few boxes.”

He put the new issue premium at around 4bp, the lower end of the four euro benchmarks to have hit the market this week. The five year maturity is also the longest of the quartet.

Bank of Montreal (BMO) leads BMO, BNP Paribas, Commerzbank, Crédit Agricole, HSBC and ING opened books with guidance of the 32bp area for a euro benchmark-sized July 2026 issue, expected ratings Aaa/AAA/AAA (Moody’s/Fitch/DBRS). After around an hour and 25 minutes, they reported books above €1bn, and after around three hours and 10 minutes, they set the size at €2bn and spread at 28bp on the back of books above €2.4bn, excluding JLM interest, with the final order book size unchanged.

A lead banker said the pricing of the three-and-a-quarter year deal was roughly flat to where compatriot CIBC priced its €1.5bn four year yesterday (Monday), at 33bp, and 4bp-5bp back from BMO’s curve.

“The 3.25 year maturity fit the issuer’s needs and, as usual, the shorter, the deeper the investor base,” he said, “so it was no surprise that the book was bigger than CIBC’s.

“We got a good, high quality book together, so were able to tighten 4bp and then solve for size – as with CIBC yesterday, investors appreciated the clarity.”

Australia & New Zealand Banking Group (ANZ) leads ANZ, DZ, NatWest, SG and UBS opened books with initial guidance of the mid-swaps plus 18bp area for a euro benchmark-sized April 2025 issue, expected ratings Aaa/AAA (Moody’s/Fitch). After around three hours, they set the spread at 15bp on the back of books above €1.9bn, including €40m of JLM interest, and the deal was ultimately sized at €1.5bn, with the final book size unchanged post-reconciliation.

A lead banker said the initial guidance reflected a concession of 8bp.

“We took 3bp off the table, leaving the issuer and investors with 5bp over fair value, and this resulted in a rock solid €1.9bn book for a €1.5bn deal,” he said, “and, on balance, this aggregate provided the best balance.”

A syndicate banker said it remains to be seen if new issue concessions will diminish as the recovery builds, but suggested core Eurozone issuers have been waiting for an improvement in conditions before tapping the market.

“Many have done a lot already this year, and at tighter levels,” he added, “so why come when there is still a bit of price discovery involved? I can imagine that – unless they have funding programmes of a magnitude such that they can’t take a break – core Eurozone issuers may stand back and wait for concessions to come down a bit.

“It seems they want others to do the ice-breaking and could then be a bit more opportunistic.”

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.

Unlike a cut in the Eurosystem’s orders from 20% to 10% last week, the absence of a CBPP3 ticket from Berlin Hyp’s book – the first eligible euro benchmark to have been launched with a settlement date in March – was in line with expectations since the European Central Bank gave its latest asset purchase programme update on 2 February, when it flagged the phasing out of primary market purchases ahead of the start of only partial reinvestments of APP maturities in March.

“They were not in today’s BHH,” said a syndicate banker. “We only have that deal to go by so far, but we expect it to hold true going forward.”

While the fate of the primary market after the Eurosystem’s departure has been a topic of much debate in the past months and years, the predictable nature of its end amid an otherwise strong covered bond market – where CBPP3 will continued to be active in the secondary market – has led many market participants to play down its ultimate exit.

“Their presence was already negligible prior to this,” said one, “so the 10% difference shouldn’t rock anyone’s boat – if it would, then there’d have to already be something wrong with the deal.

“Any impact should be purely psychological and as such hard to identify.”

But another banker was more circumspect.

“Let’s not be arrogant,” he said. “The covered bond market is very strong and plenty of private investors are involved, but for some of the smaller, rarer names that don’t appeal to everyone, an ECB order will always be helpful – we saw a couple of deals this year where Eurosystem enabled them to get over the line.

“Such issuers will have to stay slightly more conservative, picking investors’ sweet-spot in terms of maturity, for example, rather than going for something longer or unusual, and those concerned about momentum could start out a little wider.”

Syndicate bankers perceived no direct impact on Berlin Hyp’s five year mortgage Pfandbrief today, although noted that the transaction had perhaps not been priced as tightly as might have been expected.

Leads Citi, Commerzbank, HSBC, LBBW and UBS went out with guidance of the mid-swaps plus 4bp area for the March 2028 euro benchmark, expected rating Aaa. They ultimately priced a €750m issue at plus 1bp on the back of some €1.1bn of orders.

“The comps that were circulated pointed to a pretty aggressive move from 4bp,” said a banker away from the leads, “and I imagine that €750m at 1bp was not exactly the outcome they had in mind.”

Berlin Hyp €750m October 2027s issued in October 2022 were at around minus 4bp, mid, according to those comparables, and he put fair value for the new straight five year at minus 3bp, implying a new issue premium of 4bp after a starting pick-up of 7bp at initial guidance.

“But it was a solid deal,” he added.

Another banker said the Eurosystem’s absence from order books could mark an inflection point for the pricing of the richest Pfandbriefe.

A €1bn five year deal for HSBC Canada was meanwhile around twice subscribed, with bankers citing the 32bp spread available on the five year paper as helping tempt asset managers on top of bank treasuries active in the market, while the maturity attracted central banks and official institutions keen on that part of the curve.

Leads BMO, Commerzbank, CIBC, Danske, HSBC, Natixis, Rabobank, RBC and ScotiaBank tightened pricing from guidance of the 35bp area for the March 2023 euro benchmark, expected ratings Aaa/AAA (Moody’s/Fitch).

Bankers put fair value at around 29bp, with HSBC Canada September 2027s seen at around 28bp mid, while the last five year Canadian benchmark, a €1.75bn deal from Bank of Nova Scotia on 9 January, was around 26bp. HSBC Canada is being acquired by Royal Bank of Canada and the latter’s September 2027s were seen at around 23.5bp, with HSBC Canada paper still trading wide of the country’s top tier names.

“It’s interesting, because it’s basically a covered bond issued by HSBC Canada, but you’ll get your money back from RBC,” said a lead banker, “so it’s basically an RBC proxy. It has good tightening potential that will hopefully leave everyone with a good feeling during the transition process.”

As well as smoothly riding out the Eurosystem’s exit, the primary covered bond market has proven resilient to weakness in credit markets in the past fortnight, said bankers, who expect further issuance to emerge as banks have left blackouts, although the record-breaking pace at the start of the year is not expected to resume.

The only officially announced euro mandate in the pipeline is a sub-benchmark for Bank of Åland (Ålandsbanken). The Finnish issuer is holding investor meetings for a planned three to five year deal via LBBW, Nordea and Swedbank.