A lack of covered bond issuance this (Monday) morning surprised syndicate bankers, though they were confident supply would emerge later this week given that the market is conducive – although one suggested that some might be waiting for spreads to improve further still.

José Sócrates, Portuguese caretaker Prime Minister

The market was said to be doing OK this morning, with no “big surprises” having affected it over the weekend. Negotiations are underway for Portugal’s support package and while there is uncertainty surrounding this, Portuguese government debt was said to be unchanged to slightly tighter this morning.

“The market opened unchanged today and post-ECB the mood is still very supportive,” said a covered bond banker.

Others agreed that the market was conducive to issuance.

“There are no barriers to getting a covered bond on the market,” said a syndicate official. “It might be a slow start to the week but we expect that something – though this is not concrete – will occur this week.”

Another suggested a recent increase in senior unsecured issuance could be playing a factor in the slow start to the week.

“There seems to be more of a focus on senior unsecured,” he said. “That may account for why there’re no covered bonds out today.”

One syndicate official said that the positive outlook for the market could explain the lack of supply.

“Some issuers might be willing to wait for further spread tightening,” he suggested.

Seasonal holidays, which have begun in countries including the France and UK this week, were not seen as an obstacle to issuance this week.

“The French schools are off this week,” said one banker, “but that doesn’t mean you couldn’t get a covered bond done.”

Coventry Building Society could launch a sterling debut shortly, having finished a roadshow with leads Barclays Capital and BNP Paribas.