TD announces largest corporate bond sale in Canadian history

The banking group is to issue $3 billion of subordinated bonds to shore up finances amid coronavirus challenges

TD announces largest corporate bond sale in Canadian history

TD set a new Canadian record Monday by announcing the issuance of $3 billion in subordinated bonds as financial institutions act to shore up their resilience to the COVID-19 pandemic.

It is the largest bond sale that has ever been issued by a corporate or financial institution in the history of Canada’s bond markets according to the lender.

Bloomberg data shows the assets were priced at 255 basis points above government bonds and the securities are callable after five years in whole or in part, subject to prior approval of the Superintendent of Financial Institutions.

The notes are expected to be issued on April 22, 2020 and will bear interest at a fixed rate of 3.105% per annum (paid semi-annually) until April 22, 2025, and at the three-month bankers' acceptance rate plus 2.16% thereafter (paid quarterly) until maturity on April 22, 2030.

The notes are not intended for sale in the United States and no registration has been made under the US Securities Act 1993.

According to Bloomberg sources, TD attracted orders of around $5 billion with around 75 investors taking part.

In March, the banking group issued senior bail-in bonds priced at $1.75 billion, which attracted almost $3.5 billion in orders from around 65 buyers, Bloomberg sources reported.

The sale Monday was the first non-viability contingency capital note in Canadian dollars since RBC issued $1.5 billion of the securities in December.

TD and Bank of Nova Scotia also issued covered bonds in March, valued at a combined $15.5 billion.

BoC update
The Bank of Canada will provide an update this week on the action it has taken to boost credit markets.

This has included buying government securities and short-term provincial and corporate debt.