TD boosts firewall with biggestever loonie corporate bond

$3B ISSUANCE

Toronto-Dominion Bank said it issued $3 billion of subordinated bonds in the largest corporate bond sale in Canada on record as it bolsters its position to ride out the coronavirus slump.

Canada’s second-largest bank by assets priced the 10-year bonds at 255 basis points above government bonds, according to Bloomberg data. The securities are callable after five years. The deal is the largest Canadian bond offering ever by a corporate or financial issuer in the country’s debt market, the lender said.

TD’s bond sale Monday is the first so-called non-viability contingent capital notes in loonies from a Canadian bank since Royal Bank of Canada sold the debt in December. RBC priced $1.5 billion of the securities, which can be converted into common stock if a trigger event occurs, at a spread of 125 basis points.

The TD transaction comes ahead of a Bank of Canada policy meeting when it’s expected to give an update on the impact of measures it implemented to boost credit markets. These included widening the collateral it takes in its liquidity operations and kicking off purchase programs to buy government securities and short-term provincial and corporate debt.

TD’s transaction garnered an order book of around $5 billion, while around 75 investors took part, according to people familiar with communications to investors. TD’s last appearance in the domestic market was on March 10 when it priced $1.75 billion of senior bail-in bonds in a deal that got an order book just below $3.5 billion from almost 65 buyers, people familiar with the matter said.