Canada

National Bank of Canada is on track to sell a $750m three year covered bond, its first covered bond in dollars since 2011.

Toronto Dominion issued the ninth sterling denominated covered bond of the year on Wednesday, and the third from a Canadian bank in the three year floating format. The transaction provided better executable funding than it could have achieved in dollars or euros. The issuer followed Bank of Nova Scotia, which on Tuesday priced the third Canadian dollar benchmark of the year, funding more cheaply than was possible in euros.

Toronto Dominion Bank became the fifth borrower this year to issue a dollar covered bond and the second from Canada. The spread it achieved was tighter than previous deals and cheaper than it could have achieved in the euro market.

Canada officially launched its renminbi settlement hub this week, after the country became the first RMB hub in the Americas in November last year.

Euro covered bond issuance could be poised to moderate next week, though it is still likely that one or two deals could emerge at short notice. Issuers outside Europe are less inclined to bring euro benchmarks as a change in the basis swap with dollars has reduced the difference in the cost of funding.

After a long succession of euro issuance from Canadian banks, Royal Bank of Canada broke ranks and issued the first dollar covered bond of the year on Thursday, funding at levels close to what it could have achieved in euros. The $2bn deal is likely to have been closely watched by other global banks with an established presence in the US market, and suggests that further deals could follow.

Canadian Imperial Bank of Commerce opened books for the third Canadian benchmark issued in euros this year. The transaction priced tighter than its peers with no new issue premium, though it was still comfortably oversubscribed. The strong result suggests potential for spread narrowing between eurozone and non-eurozone covered bonds.

After raising €1.5bn of five year funding last week, Bank of Montreal returned to the covered bond market on Tuesday to issue a sterling three year floater, the third in this format from a Canadian bank so far this year.

Covered bond issuers from outside the Eurozone launched deals this week denominated in sterling and Australian dollars. But a bigger proportion were from the Eurozone where borrowers launched deals in the single currency in maturities that ranged from four to 20 years. The transaction were priced generously and enjoyed a solid reception, with central banks taking a back seat.

Bank of Montreal (BMO) and Caisse Française de Financement Local (Caffil) respectively issued one of the shortest and longest covered bonds of 2015. BMO’s five year appealed to a wide audience enabling the borrower to issue a large €1.5bn deal. Though Caffil’s €500m 20 year appealed to a smaller audience, the very high quality investor base it appeals to bodes well for the deal’s long term performance.

Bank of Nova Scotia has returned to the covered bond market for a second time this week, mandating leads for the first Australian dollar covered bond deal of the year.

Canadian Imperial Bank of Commerce (CIBC) became the third issuer to price a sterling-denominated floating rate covered bond this week, launching its inaugural transaction in the UK currency on Wednesday. The Canadian issuer matched the spread achieved by Barclays, which priced a deal on Monday, and in greater size and with a slightly longer duration than Scotiabank, which tapped a deal on Tuesday.