Coventry Building Society is today (Friday) wrapping up the week’s supply with a £500m three year FRN, after ANZ National yesterday sold the first Swiss franc New Zealand covered bond. Euro supply next week will depend on issuers’ willingness to tap into strong demand, said bankers.

They said that the market is in good shape and rallying, and that finding issuers interested and able to enter the market is the challenge rather than uncovering demand.

“There’s no firm pipeline, although I hope there is, and that I’m on it,” said one syndicate banker. “A lot of guys are looking.”

He cited Spanish, German and perhaps UK issuers as monitoring the market, and said that more and more issuers are coming out of blackouts.

Spanish issuers will have been buoyed by a Eu2bn three year issue for Banco Santander on Wednesday, for which more than Eu8bn of orders were placed.

One syndicate official raised the prospect of there being “a deal a day, maybe two” given the strength of the market, but added that while a few months ago leads could not find demand, this time there is a lack of issuers willing to come to market.

Others said that they expect the level of benchmark primary market activity next week to be similar to this week’s, or at least for there not to be a pick-up in supply.

Coventry Building Society will price a £500m (Eu601m) three year floating rate covered bond today after leads Barclays Capital, BNP Paribas, HSBC and Lloyds built an order book of around £850m.

The issue will be priced at 165bp over three month Libor, the tight end of guidance of 165bp-170bp, in turn revised from initial guidance of the 170bp over area.

The deal is the seventh large sterling covered bond to hit the market this year, six of which are from UK issuers. Coventry’s is the fourth to come in the floating rate format and with a three year maturity.

A syndicate banker away from the leads said that spread was “bang on”, and that the issuer had obtained a good result, not needing to raise a large amount.

He said that levels in sterling covered bonds look wide over three month Libor, but that they are slightly tighter than what would be achievable in euros, with the added benefit of sterling denominated issuance not using up counterparty swap lines.

Lloyds TSB Bank is the only UK issuer to have tapped the benchmark euro market this year, with the syndicate official saying that a lack of such supply from the UK is helping put positive pressure on spreads in euros.

A re-offer spread of 165bp over compares with pricing of 160bp over for a Nationwide £650m three year floater from 16 January, and 150bp over for a £750m three year floating rate covered bond from Barclays Bank on 13 January.

UK investors bought 67% of Coventry’s issue, European accounts 25% and others 8%. Asset managers were allocated 42%, banks 33%, insurance companies 12%, agencies 8%, and private banks 5%.

ANZ National Intl yesterday priced the first New Zealand covered bond, in Swiss francs a Sfr500m (Eu415m/NZ$657m) dual tranche issue split into a Sfr200m three year floating rate note and a Sfr300m six year fixed rate issue. Credit Suisse and UBS were lead managers.

The floating rate note was priced at 80bp over three month Swiss franc Libor, and the six year fixed rate tranche at 93bp over mid-swaps.

A syndicate official at one of the leads said that the deal was oversubscribed and that this is unusual for the Swiss franc market, but that the issuer had capped the size of the tranches.

“It’s the first covered bond from New Zealand in Swiss francs, which explains why investors were so keen on it,” he said. “Diversification is a big issue for them.”

Pricing on the three year floating rate tranche was equivalent to a tighter spread in euros than where Bank of New Zealand on Monday sold a Eu500m three year benchmark (at 113bp over), according to the syndicate banker.

The six year issue is also likely to have come inside where a potential equivalent deal in euros would price, he added.

“It’s an attractive level.”

ANZ National’s parent, ANZ Banking Group, on 16 January sold a Sfr725m dual tranche deal, the first Australian covered bond in Swiss francs.