Toronto-Dominion Bank TD-T has raised $1.75-billion in deposit notes, tying Royal Bank of Canada RY-T for the largest domestic offering on record.
The 5-year issue came to market on Wednesday on the heels of a $1.3-billion two-part deal from Bank of Montreal BMO-T earlier in the day. That means Canadian banks raised $3.1-billion of new debt in one day alone.
Backtrack a few days and the numbers are even more bewildering. RBC sold $1.25-billion of deposit notes just last week and Bank of Nova Scotia BNS-T sold $1.5-billion of floating rate notes two days before that. Add them in and the amount raised swells to $6.15-billion.
If you expand beyond Canada's border, that total grows even higher. Recent foreign deals include Canadian Imperial Bank's CM-T Australian dollar covered bond deal, Scotia's U.S. dollar covered bond deal and TD's U.S. dollar floating rate note.
For the Canadian dollar deals, the banks are clearly taking advantage of low yields. After climbing to about 2.9 per cent in April, 5-year Government of Canada yields have fallen all the way down to about 2.13 per cent. While that's a much lower return for investors, the Canadian offerings have been scooped up because they look like a much safer alternative compared to anything coming out of the U.S. these days.
TD's latest $1.75-billion 5-year offering is priced at 2.95 per cent, about 83 basis points above the government bond. Bank of Montreal's latest deal came in two parts: $1-billion of 5-year notes that pay 2.96 per cent and a $300-million addition of an existing note that matures in 2025 and pays 4.609 per cent.
Note: This post has been updated. It originally stated that BMO issued $1.65-billion of debt on Wednesday. The correct total is $1.3-billion. The incorrect stat was taken from Bloomberg and has since been corrected.
