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 Tuesday, April 14. The source for secondary trading levels is ICE Data Services.

Royal Bank of Canada on Wednesday became the fourth Canadian bank to issue an Australian dollar covered bond in April, pricing considerably tighter than its compatriots and in the largest size yet. The success the Canadians have enjoyed in Kangaroos is in stark contrast to a sterile sterling market.

The Province of Alberta is preparing for a bigger borrowing programme to counter the impact of the global oil crisis and the coronavirus pandemic.

Bank of Nova Scotia was set to price a €1.25bn three year covered bond tap 25bp wider than indicative secondary levels on Thursday, its third foray in euros this year and the 19th Canadian covered bond to be issued globally in 2020. The deals are in keeping with an exceptional volume of cheaply priced Canadian public ssector bond issuance and highlight a unique set of challenges for the country's borrowers, related to sinking oil prices, an inflexible central bank and the impact of Covid-19.

Agence Française de Développement (AFD) was the latest public sector agency to head to the euro market this week as it raised €1.5bn on Wednesday with a 10 year benchmark. While the deal was fully subscribed, the order book was not huge and the pricing did not tighten from guidance, indicating that the market may be slowing.

Infrequent issuers are slowly returning to the Swiss franc market. During the past week, Eurofima brought its first Swissies deal in six years, while biotech firm Lonza printed its first bond in any currency since 2017.

Bank of Montreal (BMO) on Tuesday became the third Canadian covered bond issuer to take advantage of an improvement in Aussie dollar issuance conditions following a relaxation in the Reserve Bank of Australia’s repo requirements.

A trio of agencies hit screens with dollar deals on Tuesday. Bank Nederlandse Gemeenten and CDP Financial tapped the three year part of the curve, while the Ontario Teachers’ Finance Trust reopened a five year market that had been shuttered by coronavirus-related volatility.

Covered bond investors have begun to return, primary market spreads have tentatively started to tighten and new issue concessions are coming down — which theoretically bodes well for a broadening of supply. But bankers, battered by the stresses of the last month, remain cautious.

Toronto-Dominion Bank launched the first Australian dollar covered bond of the year on Thursday night, issuing in good size at a similar spread to where it recently issued its dollar covered bond.

Guarantor: CPP Investment Board

The euro public sector bond market has been fired up, with all tiers of issuers in the market. But it is not the same picture for every SSA, with borrowers eligible for the European Central Bank’s asset purchase programme getting a far brighter reception than those not.