Dexia Municipal Agency announced a mandate for a benchmark obligations foncières issues this (Monday) morning, but the pipeline remains unexpectedly thin after the recent holidays, with renewed concerns over Greece said to be a factor in this.

Dexia (right), La Défense

Dexia MA is expected to approach the market after the Dexia group announces first quarter results on Wednesday morning. The issuer has mandated Dexia Capital Markets, ING, Morgan Stanley, Natixis and Nomura for the transaction.

Syndicate officials away from the leads said that they are expecting a five year transaction. The French issuer last sold a benchmark in January, a Eu1bn 10 year obligations foncières deal at 100bp over mid-swaps, although Dexia Kommunalbank Deutschland issued a Eu1bn five year Pfandbrief at 35bp over mid-swaps that month, too.

The last five year French benchmark was a Eu2bn BPCE obligations à l’habitat deal last week, which was priced at 63bp over mid-swaps. A syndicate official away from Dexia MA’s leads said that the credit tends to trade some 20bp wide of other French names and another banker said that its March 2014s were at around 60bp, its January and September 2016s around 85bp and February 2018s around 90bp.

The syndicate said that he was surprised that Dexia had pre-announced its issue on a day on which the market was weak, but another banker away from Dexia’s leads said that it was nothing unusual.

“It’s good to pre-warn investors in due time,” he said, “and to have launched at the start of the week would not have been good, as Mondays tend to be a bit defensive anyway.”

No other concrete plans were announced this morning, although some Nordic names are said to be the most likely candidates to issue.

“DnB Nor Boligreditt and Nordea could come within the next couple of weeks,” said a syndicate official. “Both have released their numbers and they haven’t done much funding in euros. Nordea did their 10 year trade a while ago, so they’re probably looking at a five to seven year, while DnB Nor is probably looking at a 10 year.”

DnB Nor’s last euro benchmark was a Eu2bn five year at 32bp over mid-swaps in January.

However, some syndicate officials said that they were not convinced the market would be receptive to a 10 year deal at the moment.

Overall, syndicate officials said the pipeline was underwhelming.

“I don’t think it’s what the market was expecting it to be a few weeks ago,” said one. “A couple of Nordics are looking, but many have been active in dollars and euros, in covered and senior unsecured.”

Bankers said that they were also somewhat surprised at how the latest news on Greece had affected the market.

“When I got in this morning I thought Greece would be a non-event, to be honest,” said one, “but we saw peripheral spreads widen this morning and the Bund rally.”

Another noted that the yield on the 10 year Bund was “quite a way down” from highs of 3.5%, at just under 3.15% this morning on the back of “yet another rally”.

“All the peripherals are really taking it on the chin,” he added. “The market for covered bonds is still OK, and we are seeing reasonably constructive flows – with the exception of the cédulas market – but the backdrop isn’t that great.”

But another was less concerned.

“There is no great sense of panic in the market,” he said.