BPCE SFH reopened the covered bond market after a fortnight of subdued activity with the first obligations à l’habitat benchmark in euros this (Tuesday) morning, and two more issues were announced shortly afterwards as investors proved receptive to new supply.

“It was more or less dead during Easter and the wedding weekend, and the week beforehand was not exactly active, so the market has had some time to settle and is in better shape,” said a syndicate official. “People are less saturated than they were three weeks ago as the market has had some time to digest the recent supply, and it is therefore rather natural that the new deals are going fairly well.”

Another syndicate official echoed this.

“All the deals seem to be very well received at the spreads that are being put in front of investors,” he said. “The market is clearly in very good shape and it has been nice to see a good reopening.

“We had seen quite a lot of volatility in peripherals, with Spain within 25bp from its wides, and it’s also nice to see deals going well ahead of auctions later in the week.”

Among government bond auctions due this week is Spain with a sale of its 3.25% April 2016 Bono.

Some market participants were a little surprised that deals were being executed as early as today, rather than tomorrow (Wednesday), and one banker said that it was interesting to see issuers coming now rather than next week, when there are fewer events in the calendar.

“There are ECB and Bank of England meetings on Thursday which could potentially come out with some key commentary and some important US employment numbers on Friday,” he said.

Further core European supply is said to be in the pipeline, with Danske Bank cited as one potential candidate.

“We’re in some talks with issuers right now but aren’t sure whether they will come this week or next,” said one syndicate official. “This could be the very busy week, or it could be next week.

“As you would expect, more issuers are coming out of blackout periods, so the pipeline will fill up very quickly, and we’ll see some overcrowding.”

Another raised similar concerns.

“It is this pattern we have witnessed before,” he said. “If the market opens, they all try to squeeze through in one go.

“Those that are out already have hopefully found proper homes, but again there is the risk of overcrowding.”

BPCE SFH built a book of around Eu3.5bn for its debut, five year issue. Danske Bank, HSBC, Natixis, Santander and UniCredit went out with guidance of the 65bp over mid-swaps area and were able to re-offer the paper at 63bp over and achieve a Eu2bn size.

“This was a nice debut for obligations à l’habitat in euro format,” said a syndicate official away from the leads.

Another said that the pricing was right.

“It’s a good outcome for the issuer and fair for investors,” he said. “I think we will see more issuers out of France following the new legislation.”

Svenska Handelsbanken subsidiary Stadshypotek mandated Deutsche Bank, Goldman Sachs, HSBC, UBS to work with Handelsbanken Capital Markets on a five year benchmark, with early price talk in the low 30s over mid-swaps area.

“I am very confident on Stadshypotek’s chances,” said a banker away from the leads. “It’s highly sought after paper.

“I would expect it to price around 32bp-33bp. That would be fair.”

The last five year Swedish benchmark was a Eu1bn deal for Swedish Covered Bond Corporation at 35bp over mid-swaps on 14 April.

UniCredit Bank Austria is in the market with a three year public sector backed benchmark. Leads Crédit Agricole, Commerzbank, Erste, ING and UniCredit are understood to have gone out with a price whisper of the 40bp over mid-swaps area.

UniCredit Bank Austria’s last benchmark, also public sector backed, was a Eu1bn 10 year deal priced at 69bp over mid-swaps on 16 February.

Syndicate officials said that they were unsure if this week would be the right time for Spanish covered bonds to be launched.

“That’s a tricky one,” said a banker. “I think the market is not there for Spain and no-one really knows at what level they belong right now.

“La Caixa went pretty well before the break,” he added, “so it might happen, but if people were to do something I think it would be Santander or BBVA rather than any other.”

Santander this morning launched a senior unsecured four year fixed rate issue and had attracted more than Eu1.3bn of demand from over 150 accounts at the 175bp over mid-swaps area by about 1230 CET.