Canada

Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark and bid-yields from the close of business on Monday, April 19. The source for secondary trading levels is ICE Data Services.

RBC Capital Markets has created a new leadership position at the top of its global public sector markets business, promoting a senior banker in Toronto to fill the role.

The Covid-19 pandemic caused severe disruption to financial markets in 2020-2021. During this difficult time, the Bank of Canada and the Office of the Superintendent of Financial Institutions took a number of actions to build resilience and improve the stability of the Canadian financial system. Federally regulated financial institutions were, among other things, permitted the privilege to pledge covered bonds with the central bank, which provided access to long-term repos and benefited from preferential regulatory treatment of loans subject to payment deferrals.

SSA borrowers are out in force in the dollar market, hitting screens with mandates alongside a pair of US Treasury auctions. Uncertain dynamics in the Treasury market will mean these auctions are well-watched for any repeat of the disappointing February seven year and the volatility it sparked.

KfW and CPPIB Capital achieved super tight pricings in the short end of the US dollar market on Thursday, with the former bringing the first deal with a negative spread to mid-swaps in the currency by a public sector borrower this year.

Canada’s Office of the Superintendent of Financial Institutions has removed the temporary increase of the covered bond issuance limit mirroring the Bank of Canada’s earlier decision to remove covered bonds as an eligible asset for repo funding.

Three SSA borrowers were set to come to market for five year paper on Wednesday, with two targeting fixed rate benchmarks and the other a five year floater linked to the secured overnight financing rate.

Fédération des caisses Desjardins du Québec (CCDJ) issued a rare and well subscribed five year euro covered bond on Tuesday, which was priced inside fair value. The outcome was similar to a recent deal from National Bank of Canada, but is not expected to boost supply prospects.

The Covid pandemic has delayed a lot of progress in the capital markets, but bankers say the industry is still on track to meet Libor transition deadlines. Investors have consented to the Bank of Nova Scotia transitioning the basis of its sterling covered bond from Libor to Sonia, while Westpac is seeking consent.

National Bank of Canada’s €500m seven year covered bond issued on Thursday, showed that a positive spread to mid-swaps has a greater impact on demand than a positive yield.

Verizon Communications, the US telecoms group, embarked on an almost $3bn niche currency bond issuing spree this week, which included the largest foreign Swiss franc bond since early 2018.

Sameer Rehman, director of debt and capital markets at TD Securities in London, is heading back to Toronto after 12 years in the UK to focus on Canadian public sector borrowers.