Canada

Four US global banking titans roared out of earnings blackout to raise more than $20bn of debt this week, issuing deals either side of president Joe Biden’s inauguration.

Royal Bank of Canada issued a tightly priced €1.25bn 10 year covered bond on Tuesday. While it only attracted just enough demand for it, the long tenor, investor diversification, cost of funding and deal size were positives for the borrower.

A trio of SSA issuers pulled off another string of successful deals in the dollar market on Wednesday, with issuers able to push the envelope on pricing more than is usually possible in January.

CPPIB Capital mandated the banks to lead its first ever 20 year euro benchmark on Friday, in what is also the first mandate announcement for a benchmark transaction by a non-sovereign/sub-sovereign public sector borrower in the long end of the euro curve in 2021.

MTN issuance out of Asia and Sweden provided some of the week’s bright spots in what was otherwise a quiet start to the year. With the public market now in full swing, bankers expect the private placement market to get up to speed in the coming weeks.

Canadian issuers are expected to concentrate on building their regulatory buffers in 2021 mainly with dollar senior issuance with bankers suggesting that analysts’ covered bond supply forecasts for next year, which are considerably above €10bn, are overly optimistic.

The Riksbank, Sweden’s central bank, is adding a “negative screening” process to its purchases of corporate bonds under its quantitative easing programme, meaning it will no longer buy the bonds of the most polluting companies.

Ontario Teachers’ Finance Trust hit the market on Thursday for the issuer’s first ever green bond — a €750m no-grow 10 year, for which it received an overwhelming response, causing a 7bp tightening.

HSBC Canada plans to issue its inaugural deal in euros and though the bond is not expected until next year at the earliest, there is a possibility that other Canadian banks could pre-fund before Christmas if strong market conditions last.

Ontario Teachers’ Finance Trust (OTFT) is preparing to issue its inaugural green bond under its new framework aligned to the International Capital Market Association’s Green Bond Principles.

An ESG think tank believes that the European Central Bank should drop Alberta’s euro bonds from its list of eligible marketable assets, as a punishment for its support for polluting industries. But while it is a laudable aim, it is not practicable.

Bankers are confident that Canadian covered bond issuance will resume after the Bank of Canada withdrew the repo eligibility of retained covered bonds, while honouring existing repo deals. But bankers are split as to whether supply will restart this year or be deferred until next year.