The euro covered bond pipeline has grown with the addition of Sampo Housing Loan Bank, but syndicate officials said that a tough market opening this (Monday) morning meant that the chances of new benchmark supply this week were slim, with mid-week industry meetings also a factor.

Sampo Housing Loan Bank, the Finnish covered bond issuing arm of Danske Bank, has mandated for a series of investor meetings starting next Monday (19 September) and finishing on 23 September. BNP Paribas, Danske Bank, Royal Bank of Scotland, UBS and UniCredit have the mandate for a roadshow and a potential euro transaction.

A syndicate official at one of the leads said that the meetings were primarily designed to update investors.

Norway’s Terra Boligkreditt and France’s HSBC SFH last week concluded investor meetings, and were identified by syndicate bankers as the type of issuers that could tap the market this week, if market conditions improved. Terra has already mandated lead managers (Commerzbank, Nordea, UBS and UniCredit), while HSBC carried out its roadshow on its own.

A syndicate banker said that on Friday morning he would have considered a deal from Terra to be possible this week, but that the deterioration in sentiment today meant he no longer felt this was the case.

“We are back in crisis mode,” he said. “We need calmer waters, and the political headlines have to disappear.”

He said that he did not expect benchmark supply to be launched this week.

Another syndicate official also said there would be no issuance this week.

“I think the situation is so bad that you would have to be a total wacko of an issuer to enter the market now,” he said. “This market is really poor.

“We need to see a sell-off in Bunds and equities to go up, but even then yields are still extremely low, so covered bonds are at very unattractive levels.”

Other syndicate bankers also described market conditions as difficult, with one pointing to further spread widening of Dexia Municipal Agency covered bonds on the back of similar pressure last week.

Another said that the market had turned on Friday already, and that its poor opening this morning was a continuation of this.

“It’s all about Greece really,” he said.

He pointed out that the Italian government this morning auctioned 12 month T-bills at a yield of 4.15%, compared with a 2.96% yield on 10 August. The yield increments were “pretty eye-watering”, he said.

Another factor highlighted as relevant to the market’s development today is the release of a final report by the Independent Commission on Banking on reform of the UK banking sector.

A syndicate official suggested that any improvement in the market’s outlook depended on political action.

“Investors are sick and tired of this not being resolved,” he said. “It’s all in the hands of the politicians.

“You have the implementation of EFSF in different countries, with Germany being the most important one to watch, and most of September is a continuing watch on Greece.”