Canada
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Covered bond issuers failed to take heed of poor market conditions and, just like lemmings, followed one another with poorly performing deals this week.
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Bank of Montreal (BMO) returned to the covered bond market for the fourth time this year to issue its third benchmark in euros. At seven years, the tenor was longer than the borrower’s previous two benchmarks, but at €1bn it was considerably smaller even with a wider spread.
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Caisse Centrale Desjardins (CCDJ) launched a two year floating rate note on Wednesday, making itself a belated addition to last week’s list of Canadian banks printing euro floaters. -
Yankee bank deals are expected to take centre stage in a resurgence in high grade issuance when the dollar market reopens after its three-week hiatus.
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Covered bonds proved their worth this week as, despite difficult market conditions, 10 borrowers were able to collectively raise more than €8bn at levels that looked attractive compared to senior unsecured financials.
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North American banks took advantage of the opportunities offered by euros this week, as the dollar market remained quiet ahead of Labor Day on Monday. The deals showed the FIG sector regaining its poise after the recent bout of volatility, said bankers.
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The Canadian state of Quebec has delayed the implementation of a new rule that would require registration for foreign brokers trading derivatives for investors located there.
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Activity in the covered bond primary market continued at a brisk pace on Wednesday as RBC, DG Hyp, Caffil and Erste Bank priced transactions, taking the deal count this week to 10. Despite mixed receptions, issuers have been able to raise over €7bn, with over €3bn issued on Wednesday, and at levels that look attractive compared to senior unsecured financials.
