Laurentian Bank priced the first covered bonds in Canadian dollars this year as the Montreal-based lender explores strategies to improve its funding costs compared to larger rivals.
The bank sold C$300 million ($238 million) of the notes, which are secured by a pool of mortgages on top of a senior priority, at the tight end of guidance of 100 and 102 basis points over the Canadian yield curve, according to people familiar with the matter. The double guarantee of the securities allowed the lender to raise debt at lower borrowing costs than bigger rivals such as Bank of Montreal whose recently sold 5-year senior unsecured bonds are quoted at a spread of around 125 basis points, according to Bloomberg prices.
