Coventry Building Society is eyeing a return to the euro benchmark covered bond market after the issuer revised plans to do so earlier in the year when investors signalled appetite for a sterling deal instead, an official at the issuer told The Covered Bond Report.

The UK lender has mandated for a roadshow starting on 19 September, with Bank of America Merrill Lynch, Danske Bank, HSBC and Landesbank Baden-Württemberg due to lead manage a new issue that is likely to follow if feedback and market conditions are positive.

Kris Gozra, deputy treasurer at Coventry Building Society, said that the issuer has planned to carry out a euro roadshow for some time.

“One of our plans in establishing the programme was not just to reach potential sterling investors, but to reach euro investors, too,” he said. “By going out for a week on the 19th we are looking to get a feel for investors’ appetite and market conditions.”

If both prove satisfactory then the issuer would strongly consider following up the roadshow with a transaction, he added.

Coventry has not tapped the euro covered bond market since the onset of the credit crisis, but sold a £750m (Eu849m) seven year deal in April, shortly after obtaining Regulated Covered Bond status for its programme.

According to Gozra the building society expects the programme to bring in significantly cheaper funding for the issuer.

The focus of this month’s roadshow is clearly on laying the groundwork for a euro transaction, said Gozra, but the issuer will keep its options open with respect to the timing and currency of a transaction.

“It’s fair to say that there would definitely be a planned euro issuance at some point in the future, but it’s just whether it immediately follows the roadshow or not,” he said. “There’s an old adage that roadshow work is never wasted.

“The more work you put in, the more favourably you will be received when you go to market.”

With respect to the currency choice, Gozra said that the issuer is focussing on euros, but that it will take into account feedback from the roadshow, adding that the experience of its sterling issue in April showed the importance of being flexible.

“Right up to a few weeks before that issue we probably would have said that we were going for a euro issue, but the feedback told us that a seven year sterling deal would go well,” he said. “Until you go out there you just don’t know.”

However, the issuer believes it has a strong story to tell, he said.

“We would like to imagine that we offer diversification and would be an attractive name,” he said.

According to Gozra, Coventry has emerged positively out of a Moody’s systemic review of UK banks and building societies, with a one notch upgrade of its standalone bank financial strength rating and affirmation of its issuer rating at A3, on stable outlook.

He added that the issuer intends for covered bonds to play a significant role in its funding and that the issuer therefore wants to have access to the euro market as the largest market.

Gozra said that while Coventry’s cover pool is large enough to sustain a benchmark of Eu1bn, the issuer will likely target a smaller deal, but be open to taking more out of the market depending on the level of demand.