Some market participants expressed hope that the ECB’s covered bond purchase programme could help prop up issuance next week after little activity amid holidays today (Friday). ANZ plans to issue a five year US dollar denominated covered bond next week pending market conditions.

“Today is a holiday in the US and France, so the market is really quiet,” said a syndicate official, “but it’s also really quiet because it’s been a series of really stressful trading sessions this week.

“I think everyone is happy to sit back and lick their wounds.”

Italy was tighter today and equities were up, he added.

He said CBPP2 would have to have a positive impact soon.

“Look, the ECB has to spend a couple of billion a month,” he said. “That’s a lot of money that needs to go to work, so it has to help.”

Another syndicate official expected more movement from the programme next week to help bolster issuance.

“The buying yesterday we saw was going on in Pfandbriefe,” he said, “so I think the other central banks are waiting for the primary.”

Another syndicate official said he did not expect CBPP2 to be able to help prompt issuance in this market.

“The ECB has been buying Italian debt for three months now and that hasn’t helped anything,” he said.

The ECB could report the first purchases under the programme on Monday.

Greece and Italy will remain in focus next week, said a banker, and would partially determine market conditions.

He said the overall problems will not disappear now that Lucas Papademos has stepped in as Greece’s new prime minister and Mario Monti is expected to replace Italian prime minister Silvio Berlusconi.

The debut from Australia & New Zealand Banking Group – which will be the first ever Australian covered bond - is expected to be positively received, said syndicate officials, who expect the trade to be met by strong interest.

“I expect it to go really well,” said a syndicate official. “I just think there will be an incredible bid for Australian paper, with strong demand from European, US and even Asian investors.”

Another syndicate official said ANZ had employed an interesting strategy by announcing the mandate on a US holiday and before a weekend.

“Pricing is going to be tricky because we have seen US spreads widen significantly, so it’s hard to judge,” he said. “But you can look to some of the Nordic names as a comparison.

“My estimate is in the 115bp-120bp over mid-swaps bracket, on the back on some of the Nordic names,” he added.

Another syndicate official said he expected the transaction to come through where a Scandinavian transaction would be priced.

The announcement from ANZ had bankers wondering whether the Australian banks had coordinated timing for their issuance.

“It sounds like ANZ put this up there to jump the queue,” said a syndicate official. “I would have assumed that this region would have had a more coordinated approach than jumping ahead of one another.”

NAB started a roadshow on 31 October and met with investors this week. It was rumoured to be the first mover out of Australia.

“I would hope that they’re coordinating among themselves,” said a banker, “since they’re all sensible banks.”