France’s BPCE is tapping a March 2022 obligations à l’habitat issue for Eu600m today (Tuesday), providing the first benchmark euro supply of the week as blackouts and volatility amid French elections and Dutch government problems keep new issue projects at bay.

BPCE SFH said this morning that it was adding at least Eu250m to a Eu1.25bn 4% March 2022 issue with sole lead Natixis having set guidance at the 120bp over mid-swaps area. The deal size is said to have been set at Eu600m with pricing at 120bp over.

The originally Eu400m deal was tapped for Eu850m on 12 January at 175bp over. The issuer last came to market on 6 February, with a Eu1.25bn five year deal that was priced at 120bp over.

Today’s tap is the first French benchmark supply since covered bonds from a range of jurisdictions came under selling pressure given widening of government spreads, with Natixis analysts last week noting that several long dated French covered bonds were trading flat to equivalent OATs.

A banker in Paris said that OATs had held up well amid widening of much euro-zone debt yesterday, and despite weakness in equity and credit markets, and that some investors could therefore feeling more confident about some stability after the first round of French elections and willing to invest in the tap.

Another syndicate official away from the BPCE tap said he assumed it was driven by reverse enquiry and that it be supported by domestic demand despite French paper not being an easy sell.

Away from BPCE’s tap syndicate bankers said that some issuers have been monitoring the market for issuance opportunities, but that they are well funded and hence under no pressure to launch a deal when market conditions are not supportive, as is the case.

“The volatility is not exactly helpful,” said one, “and some issuers are also in blackouts.”

Broader market sentiment was more positive this morning, according to the syndicate banker, with the Bund Future down somewhat from its latest all time high, and spreads on French, Italian and Spanish sovereign debt opening on a relatively stable footing.

“It’s a counter-reaction, but it’s hard to know if it’s a new trend,” he said.

Dutch credit was the focus of selling interest yesterday (Monday) after the government’s cabinet resigned over a budget disagreement, but the syndicate official said that government spreads were better supported today in the short end following an auction this morning, and that this was a stabilising factor.

Another syndicate banker said that a few issuers have been monitoring the market, but that they are recommended to wait until conditions are less volatile before proceeding with any deal as the market continues to seek direction.

Another suggested that there will be little benchmark euro supply in the period leading up the second round of the French presidential elections given nervous and political markets, with upcoming public holidays and conferences also likely to lead to reduced activity.