Berlin-Hannoversche Hypothekenbank is collecting indications of interest for a Eu1bn five year mortgage Pfandbrief that is planned for launch tomorrow (Tuesday), while Clydesdale is this week roadshowing in connection with a sterling issue.

Barclays, DZ Bank, HSBC, JP Morgan and Landesbank Berlin are taking indications of interest for the no-grow new issue in the low teens over mid-swaps. The move comes after Berlin Hyp in April launched a buyback of public sector Pfandbriefe in a bid to mitigate costs involved in meeting overcollateralisation requirements for its mortgage Pfandbriefe. These are rated Aa1 by Moody’s and AA+ by Fitch, both on stable outlook.

A German deal had been mentioned as a possible new issue by syndicate officials confident of euro benchmark supply this week. One also mentioned possible French supply.

French covered bond spreads have widened 5bp-15bp due to uncertainty over the future of CIF Euromortgage, with the latter widening by 75bp-100bp, to trade in line with Dexia Municipal Agency covered bonds, according to another syndicate official.

However, French issuers could still tap the market despite this uncertainty given good domestic support, said syndicate bankers, with one noting that any French covered bond would need to start with an initial new issue premium of 5bp-10bp but could still meet with a good reception.

Today’s market opening was soft, but sentiment turned around dramatically during the course of the morning, according to one syndicate banker, who said that the “stars are aligning” for a new issue, with a positive market backdrop coming on top of supportive technicals.

“Issuers should try to take advantage of pretty immune primary markets in covered bonds”, he said, noting that a negative net supply of sovereign bonds had helped to “keep the ship steady” over the past few weeks but that some Eu30bn-Eu35bn of positive sovereign supply would hit the markets over the coming weeks.

Other syndicate officials were also optimistic there will be covered bond supply this week, with one noting that this is the only full working week in May. The market backdrop was “OK”, he said, with the focus on digesting news-flow and volatility still likely this week.

There is no peripheral government bond supply this week, but headline risk remains, with EU leaders gathering for a summit on Wednesday, for example, said syndicate officials.

One said that jointly issued euro-area government bonds are likely to come up for discussion in a push from French president François Hollande, but that any disagreement over this between him and German chancellor Angela Merkel should not affect covered bond issuance prospects.

Clydesdale Bank has mandated Barclays, NAB, RBS and Santander in connection with a sterling covered bond roadshow, which will take in London and Scotland this week. The UK issuer last year roadshowed for a debut euro benchmark, but a deal did not emerge and the issuer has yet to sell a covered bond.

Clydesdale, which is being restructured by its parent National Australia Bank (NAB), is rated A2/A/BBB. Standard & Poor’s on 30 April revised the outlook on its BBB rating from stable to positive to reflect the transfer of £6.2bn of commercial real estate loans to NAB and Fitch earlier this month affirmed its A rating in response to NAB deciding to maintain a UK presence. Moody’s is reviewing for downgrade its A2 rating of Clydesdale Bank.