An imminent new benchmark for La Caixa was the focus of attention this (Monday) morning, with market participants looking to the deal to provide signals as to investors’ attitudes to second tier Spanish names. Meanwhile, dollar issuance could pick up shortly.

La Caixa has mandated JP Morgan, La Caixa, LBBW, Nomura and Société Générale for a new benchmark that is expected to be a four year transaction. Indications of interest could be taken as early as this afternoon.

The Spanish savings bank issued a Eu2bn five year cédulas on 10 February, which was priced at 220bp over mid-swaps. A banker at one of the leads of the forthcoming issue said that the five year deal was quoted at around 210bp/200bp.

La Caixa, Barcelona

A syndicate official away from the leads said that he had heard early price indications of the 200bp over mid-swaps area for a new four year. He suggested that this was ambitious, but did not expect a contentious spread.

“There haven’t been a lot of pricing issues of late,” he said, “especially on the Spanish deals. They’re priced to go – it’s rather a question of whether they can be done or not.

“And sentiment towards Spain seems to be improving,” he added.

Another said that the key question would be how big a book La Caixa might achieve. It garnered Eu2.5bn of demand from some 110 accounts with its five year.

“They book size will be very interesting,” said the syndicate official. “The question is whether they will get Eu2bn or Eu3bn, or just subscribed.

“This will tell whether the tier two names can come as well. Santander went well, but does La Caixa have the same audience?”

He said that 200bp for a new issue would be around 20bp wide of Santander, with Santander at around 170bp in the secondary market.

However, one banker said that guidance could instead be 200bp-210bp.

The deal is not expected to be launched officially today, but either tomorrow (Tuesday) or Wednesday, although the issuer is understood to have been keen to put down a marker by announcing its plans on screens, particularly given talk of other Spanish names coming to market, including Banco Bilbao Vizcaya Argentaria, Banco Pastor, and, with a possible five year, UniCaja. However, the lead banker said that two deals coming at the same time should not be problematic, even if heavier supply could be.

Although a four year issue would be close to the five year maturity La Caixa sold only last month, he said that initial feedback was positive and indicated that this was not an issue.

Banco Popolare has mandated a new five year benchmark, after Italian supply from Banca Carige and Banca Popolare di Milano last week. BNP Paribas, Goldman Sachs, RBS, UBS and Banca Aletti have the mandate.

Supply from core countries is expected to be less exciting, partly because of comments from European Central Bank president Jean-Claude Trichet last week suggesting that interest rates could rise. One syndicate official said that this could affect prospects for supply at the long end.

“Will the insurance companies keep buying the long end?” he asked, “Or will they move to the belly of the curve or be absent until the new yield environment becomes clear? It’s always difficult to see how the usual suspects will react to such a change and there could be changes in asset allocation.”

He suggested this could affect whether or not French issuers return; after more than Eu18bn of supply in the first month and a half of the year, they have been absent for over two weeks.

“We are missing a little bit the Frenchies,” he said. “A fortnight for France is a long absence.”

Another market participant suggested that, with yields higher in the three to five year part of the curve, shorter dated issuance might be better received.

Dollar issuance could pick up soon, with Nordic names said to be in the pipeline. DnB Nor Boligkreditt is a candidate for issuance as early as this week, with others such as SEB and Nordea Hypotek also said to be heading for the US market.

Caisse Centrale Desjardins, part of Quebec’s Desjardins Group of credit unions, is understood to be preparing the ground for US dollar issuance by presenting a new covered bond programme to investors with RBS. The cover pool will comprise mortgages insured by Canada Mortgage & Housing Corp, like those of all other Canadian issuers except for Royal Bank of Canada.

The Desjardins Group forms Canada’s largest credit union and would be the first such institution to enter the covered bond mark from Canada. Central 1 Credit Union, comprising credit unions in British Columbia and Ontario, has also been considering issuing covered bonds.

Quebec’s Autorité des marchés financiers paved the way for Desjardins to issue in April last year when it issued a notice relating to covered bond issuance.