Issuance windows are expected to be few and far between this week due to a heavy schedule of meetings and data, and holidays in parts of Europe, although getting in ahead of an anticipated pick-up in supply next week is understood to be key to one potential new issue project.

Syndicate bankers said that market conditions were weaker this (Monday) morning than on Friday, with Italian and Spanish CDS levels wider and the iTraxx senior index also off.

A combination of central bank policy meetings, public holidays, data releases, and a G20 summit, along with challenging market conditions, means that the primary market in covered bonds is likely to be quiet this week, they said.

Today and tomorrow have public holidays in parts of Europe, while a two day meeting of the FOMC starts on Tuesday. The Governing Council of the European Central Bank meets on Thursday, with new president Mario Draghi (pictured) expected to announce details of the bank’s second covered bond purchase programme (CBPP2). A G20 summit also takes place on Thursday, with the release of nonfarm US employment data on Friday wrapping up the week.

“It’s a very tight week, with Wednesday probably the only window,” said a syndicate banker. “It’s an incredibly data-heavy week, although clearly people are looking.”

He said that a focus over the weekend on a lack of details contained in last week’s agreements on a euro-zone rescue deal had caused markets to lean towards a “risk-off” mode today, but that the covered bond secondary market was on hold as market participants await clarity on CBPP2 and a resumption of new issuance to reveal clearing levels for deals.

Fixed income markets were said to be quiet across the board this morning, with the exception of a Volkswagen deal in euros and a tier one issue for Rabobank in the US dollar market.

“The mood is worse than last week,” said a syndicate official.

Another said that weaker market conditions reflected a consolidation after a rally last week on the back of the deal emerging from the EU crisis summit, and that it was “nothing very material in terms of market tone”.

“Looking ahead, things look much better than any assessment from 10 days ago,” he said.

He said he expected supply from core and southern European jurisdictions to emerge next week with “more or less everyone ready to shoot”, but played down the likelihood of much primary activity this week.

However, it could make sense for certain issuers to anticipate next week’s supply and tap the market this week, he said, citing the possibility of a Pfandbrief from a rare, high quality German issuer surfacing. Such a deal could appear expensive if it emerges amid sovereign, supranational and agency (SSA) supply next week, he said.

Euro-zone issuers were otherwise likely to stick to the sidelines, he added, while issuers outside the euro-zone could tap the market given that their covered bonds are not eligible for CBPP2 and will therefore only be affected indirectly.

Another syndicate banker said that “quite a few” issuers are in blackout periods and that some issuers were also quite well funded.

Bank of Nova Scotia on Friday sold a $2bn three year 144A/RegS covered bond, a day after Bank of Montreal tapped the US dollar market with a deal of the same size and maturity.

Bank of America Merrill Lynch, BNS, Barclays Capital, Morgan Stanley and UBS priced Scotia’s deal at 48bp over mid-swaps, 2bp inside where BMO’s transaction was reoffered the day before. Guidance is understood to have been 48bp-50bp over.