Covered bond bankers said the market was supportive today (Monday) despite there being no new issuance, after Greece voted through measures necessary to secure a second bailout last night. Italian covered bond issuers were said to be the next peripheral candidates.

“We have to be realistic,” said a syndicate official. “The situation with Greece will never go away but the latest news gives further comfort to people staying in risk-on mode.

“There is no official supply announced in the market,” he added. “But there is a more positive tone than on Friday.”

Bankers said that the prospects for obbligazioni bancarie garantite issuance had improved on the back of Greek headlines.

“The spread between Bunds and Italian covered bonds has tightened significantly over the last couple weeks,” he said. “The levels we are seeing at the moment are not anywhere near the highs we saw when UniCredit did a 10 year in August.”

UniCredit priced that October 2021 trade at 215bp over mid-swaps.

“I think we could see a four or five year from Intesa,” added the syndicate official.

Intesa Sanpaolo on 31 January launched the first peripheral bank bond in three months, a Eu1.5bn 18 month floater at 295bp over mid-swaps.

A survey conducted by LBBW at a conference on 3 February found that 50% of investors in attendance were willing to invest in Italian covered bonds, a proportion higher than for Spain (27%).

Spain’s Bankia was also said to have been monitoring the market, but any project appears to be on hold.

A syndicate official said that for him the recent rally had been a case of “too far too fast”. He said that after such a rally it was hard to see spreads maintaining such a performance, meaning that some of the “fantasy” would have gone out of new issues.

Another banker said that a German issuer was considering tapping the market in the afternoon for a Pfandbrief tap of around Eu125m. The last Pfandbrief tap was a Eu125m increase of a Münchener Hypothekenbank 2.5% January 2016 mortgage Pfandbrief on 31 January.