Market participants anticipated a quiet week this (Monday) morning as renewed Greece concerns once again put a brake on the primary market and Dexia Kommunalbank Deutschland was the only issuer ready to brave the market with a benchmark covered bond, although Société Générale confirmed an expected SFH mandate.

BBVA, Crédit Agricole, ING, SG and UniCredit will lead Société Générale SFH’s debut benchmark and have said they will proceed shortly.

Dexia Kommunalbank Deutschland

Commerzbank, Dexia Capital Markets, Helaba, HSBC and NordLB opened books at 1045 CET on Dexia’s trade with guidance of the 32bp over mid-swaps area and by 1230 CET the books had reached about Eu600m.

“It’s not the best day to go” said a banker at one of the leads, “but it’s fine. It’s going as expected given the fact that the periphery was hit this morning.

“The market doesn’t feel too good, but it’s not a surprise and it’s not a shockwave reaction.”

Bankers away from the leads expected the deal to go well.

“It’s a lone cowboy,” he said. “With pressure on yields, the three year should work.”

Another syndicate official away from the leads said the Dexia deal was a safe trade for a market affected by Greece.

On Friday Fitch downgraded Greece’s long term foreign and local currency ratings from BB+ to B+ and put them on Rating Watch Negative.

“The rating downgrade reflects the scale of challenge facing Greece in implementing a radical fiscal and structural reform programme necessary to secure solvency of the state and the foundations for sustained economic recovery,” said the rating agency.

A banker said the market was difficult for non-core euro issuers to access, as evidenced by Spain and Italy trading about 15bp-20bp wider. Both are at their widest spreads to Bunds since January.

“The pipeline is quite low,” he said. “Things are on hold for a day or two.”

A bad result for the government party in local and regional elections in Spain this weekend caused market participants to worry that new details about Spanish debt could emerge.

“There are uncertainties about whether new legislation could reveal more debt,” said a syndicate official. “Any positive effects we saw during the first quarter out of Spain have been erased now.”

Another syndicate official said issuers were in wait and see mode for the next day or two.

“But then we have these crises every week and it doesn’t prevent much,” he added.

Another market participant had a more negative outlook.

“For the moment I can’t see anything that will change substantially in the market,” he said. “We’re not expecting the release of any economic data this week that could dramatically change things for the better.”