Covered bond issuers are awarding mandates, according to syndicate bankers, but this week is likely to elapse without more new benchmarks as market sentiment remained guarded after renewed volatility and ahead of an ECB governing council meeting and US data.

After Bayerische Landesbank yesterday (Wednesday) said that it was putting on hold a Eu1bn 10 year public sector Pfandbrief, the pipeline of announced deals in euros is empty, even if issuers such as Clydesdale Bank, which finished a roadshow last month, are known to have been planning to tap the market.

ECB Governing Council

BayernLB said that it delayed its transaction in response to Moody’s yesterday morning placing on review for downgrade its Pfandbrief ratings; the rating agency also placed on negative review the Pfandbrief ratings of Deutsche Kreditbank, HSH Nordbank, and WestLB.

A syndicate banker said there was little clarity on what might emerge from the deal pipeline, and that many transactions were on hold, with volatility causing concern and disquiet among market participants.

“The timing for LBBW’s deal was perfect, but the rest of the week has been too volatile,” he said.

Landesbank Baden-Württemberg on Monday sold a Eu500m six year mortgage Pfandbrief at 18bp over mid-swaps.

But according to another syndicate official issuers have been awarding mandates, even though he also said the market was not right for executing the transactions.

“Stockmarkets are higher, the Bund is lower, two year Portugal bonds are 75bp wider after widening of at least 300bp yesterday,” he said.

A sign of some positive market sentiment could be read into a Eu3bn auction of Spanish government bonds today (Thursday), however, with five and three year bond overbid, according to another syndicate official.

Several covered bond issuers are understood to have been considering dollar covered bonds, including institutions such as NordLB and Münchener Hypothekenbank, but the syndicate banker said that market conditions this week were also stymieing dollar transactions.

But Korea Housing Finance Corporation was identified as a more predictable candidate for issuance next week, on the condition that the market does not take a turn for the worse.

“Korea is at safe distance from what is going on here,” said a syndicate banker, “although I would not describe the deal as imminent.”