Canada

Toronto Dominion Bank has become only the second borrower from outside of the UK to sell a Sonia-linked covered bond, having quickly met enough orders on Monday to launch a £1bn offering in the sterling market.

Royal Bank of Canada’s €1.25bn seven year issued on Wednesday dropped more orders than any covered bond has in years, ending up as one of the least subscribed deals of its size since 2011. The transaction starkly illustrated that the balance of power has shifted in favour of investors and offered a salutary lesson for ambitious issuers, writes Bill Thornhill.

Bank of Montreal (BMO) has issued the first Canadian covered bond in dollars this year, raising $1.75bn of funding at a cost that was equivalent to what it would have theoretically paid in the euro market. National Bank of Canada was quick to follow, announcing a similar deal at the same starting spread.

Guarantor: Caisse de dépôt et placement du Québec

Peripheral and UK covered bonds have weakened amid broader deterioration in credit market conditions. But with activity muted the main focus is on Tuesday’s Euromoney/ECBC Covered Bond Forum in Toronto.

A quartet of public sector borrowers placed paper in the Australian dollar market this week. Two European SSAs priced sustainable and climate awareness bonds: the European Investment Bank priced its third climate awareness Kangaroo on Tuesday, while Bank Nederlandse Gemeenten brought its sustainability bond programme back to the Aussie market on Wednesday. Meanwhile, a pair of agencies raised funding in Australian dollars on Thursday: Export Development Canada and Eurofima both tapped Kangaroos.

A pair of agencies raised funding in Australian dollars on Thursday: Export Development Canada and Eurofima both tapped Kangaroos.

The Office of the Superintendent of Financial Institutions (OSFI) in Canada has increased covered bond issuance limits which should improve issuance flexibility among Canada’s smaller banks — leading to possible issuance from names like Equitable Bank among others.

Guarantor: Canada

Export Development Canada sold its second Sonia-linked floating rate note on Friday, which extends the issuer’s curve linked to the reference rate to 2024.

European financial institutions have made very limited use of Canadian dollars in recent years, but the region’s issuers could soon start to embrace the Maple market as they look to diversify their funding bases for the minimum requirement for own funds and eligible liabilities (MREL).

Canadian Imperial Bank of Commerce issued its second Australian dollar deal of the year on Thursday. The senior unsecured short-term debt is not subject to Canadian bail-in regulation.