Canada

Canadian Imperial Bank of Commerce (CIBC) became the second Canadian issuer to price a legally compliant covered bond in Australian dollars. The A$500m floating rate long three year deal, which could have been increased, provided competitive funding and solid investor diversification.

Royal Bank of Canada sealed its place as a truly global issuer when it returned to the dollar market for the second time in three months to raise $2bn of five year funding, its longest SEC registered deal in the currency so far. This was its fourth benchmark covered bond deal of 2013, making it by far the most prolific borrower with the broadest global reach.

Royal Bank of Canada’s recent €2bn seven year covered bond came in for criticism because its final spread of 16bp was deemed too far away from the initial price thoughts that are supposed to help investors make a decision on the relative value of a trade. If they commit to buy with an indication of interest, issuers should have the decency to make sure that the final spread comes reasonably close to the starting point.

Canadian Imperial Bank of Commerce attracted a very well oversubscribed book for its inaugural Canada Housing Mortgage Corporation registered covered bond. It opted for €1bn — only half the size of Royal Bank of Canada’s recent euro issue — but its needs are much smaller and it funded tighter than where it could have in US dollars, the leads said.

Royal Bank of Canada has issued the first Australian dollar benchmark of 2013, pricing the three year floating rate deal at the tight end of guidance. The depth of demand and the competitive funding cost could tempt other covered bond issuers to look at the Australian market.

Not content with pricing the first regulated Canadian covered bond in euros and the first regulated benchmark in US dollars, the Royal Bank of Canada is now marketing its first Australian dollar covered bond benchmark.

Core European covered bonds were supported on Thursday despite recent downgrades. But weaker Spanish names were under pressure on concerns that the European Central Bank could be poised to reconsider the repo treatment of covered bonds relative to ABS. Meanwhile, primary hopes were hit after it emerged that programme documentation delays could cause Canadian Imperial Bank of Commerce (CIBC) to launch its benchmark in September rather than next week.

Royal Bank of Canada has reopened the Canadian covered bond market with the first deal to comply with new covered bond legislation that the country put in place late last year. The landmark $1.75bn trade was the first Canadian covered bond of 2013 and is likely to be followed by a series of other deals — although these may not now emerge until September.

Canadian Imperial Bank of Commerce (CIBC), which is roadshowing for a euro covered bond, has the potential to price inside last week’s deal for Quebec, bankers told The Cover on Monday. Bankers do not expect covered bond issuance from European banks until the end of August at the earliest. The market has barely reacted to Friday’s downgrade of France by Fitch and in some cases, spreads have actually tightened.

Canadian Imperial Bank of Commerce is set to be the first Canadian bank to issue a deal using the country’s new legislative framework after it mandated banks for what is most likely to be a euro denominated transaction.

Canadian banks are set to bring new covered bonds after US and Canadian regulators cleared the way for three issuers on Wednesday. The covered bond programmes of Canadian Imperial Bank of Commerce (CIBC) and Royal Bank of Canada (RBC) have been activated by the Canadian Mortgage and Housing Corporation (CMHC). Separately, Bank of Montreal has moved a step closer to SEC registration.

Secondary market selling of covered bonds slowed a little on Friday ahead of the US payrolls report. But bankers say the US data won’t make much of a difference as further selling is likely. In the primary market there is concern that if a deal is incorrectly priced, it will add to problems and potentially close the funding window for other issuers