The Toronto-Dominion Bank landed the biggest five-year sterling covered for a non-UK issuer since 2021 on Monday, proving that despite the continuous supply from Canada, investors still have money to put to work towards their credits.
The lender landed a £850m trade on books of £1bn via Barclays, CIBC, HSBC, Lloyds, and TD, which a lead manager described as a "stonking result".
This was despite the fact that, just like in the euro market, Canadian banks feature regularly in sterling covereds.
"I think there's been a lot of fatigue, investors have had enough," a banker away said after the first update showed books around £800m. "We've just had BMO come through and now TD. It's a bit too much I'd say. I think levels probably need to widen and issuers should wait a little before bringing more supply."
BMO priced a £750m 4.25-year Sonia-linked covered bond at the end of May with orders just above £920m, including £60m of lead participation.
Still, TD's leads were able to revise the pricing level 2bp tighter from the 72bp area over Sonia guidance, to 70bp over.
Another banker away was more complimentary however.
"I think it looks OK," he said. "They're printing £850m off a £1bn book at 70bp over. This is good in the context of the Canadians, given that they're not repo eligible and five-year isn't the sweet spot. They could have done a bigger deal if they'd gone shorter as the market is deeper there, so this is a good outcome."