Market participants suggested this (Friday) morning that a second European Central Bank longer term repo operation due next Wednesday could keep issuance at bay, although French and Spanish names appear to be the most likely candidates should supply emerge.

A syndicate banker at one of the leads on a Bankia Eu500m two year deal from Wednesday said Spanish issuance would surely follow it.

“I think the strong Bankia trade will lend confidence to the market,” he said, highlighting that only 51% of the issue had been bought by Spanish accounts, and that it was the first time a Spanish issuer had done a trade that does not settle in time for it to be used as initial collateral in Wednesday’s LTRO.

“We will see some more Spanish issuance going forward,” he said, suggesting Bankinter as a candidate.

Another agreed that Bankinter could emerge next week, but said that it was likely to wait until after the LTRO.

“I don’t think the LTRO is going to change much, but people will be sitting watching it,” he said. “Also, the market may be in good shape at the moment, but it needs to be in great shape to get these Spanish deals done.

“That’s not necessarily the case for a name like Santander or a two year maturity like Bankia, but once you drift beyond three years for a name weaker than CaixaBank, you probably need a very good market.”

The other syndicate banker said the market was still challenging for peripherals.

“The market is receptive, but I have this feeling the market is difficult for them – Spanish issuers included,” he said. “The market would welcome core European or Scandinavian issuers, but I don’t think there is so much funding demand even though the investors are there.”

Another syndicate banker was more positive, saying he expected next week to be busier than this, when only two benchmarks were launched, noting that markets were more positive today than in the past couple of days.

“If the market continues to be conducive, then I would expect supply from the periphery and France,” he said. “Why not some cédulas? Why not some French issuance?

“I would also expect another country, maybe the UK.”

He said everything was open.

“We have experienced a nice rally in late January, early February, followed by a market correction over the last 10 days, and now the positive trend continues again,” he added. “I presume a strong market should mean a bullish tone next week.”

Caisse de Refinancement de l’Habitat is considered the most likely candidate from France, but elsewhere a syndicate official said that there is no obvious pipeline.

“I think we will continue to see little issuance – much like this week,” said one. “LTRO supply is providing a lot of cheap money to banks, so now maybe they will be less likely to come to the market because they can get cheap money through this tool.”

A syndicate official said next week was a “funny week”.

“I think it will be quite headline driven, with all the auctions and the LTROs on Wednesday,” he said.

Belgium, Italy, German, Spain and France are all holding auctions next week.

But he said the LTROs would have a positive influence, acting as a supportive factor for new issues in the primary market, and for the secondary market.

“Behind the scenes, it is of course playing a role,” he added.