Broader market conditions were bleak this (Monday) morning, with a political stalemate in Greece among developments weighing on sentiment, but some syndicate officials said that benchmark covered bond issuance could yet emerge this week.

Syndicate officials were mixed in their expectations for any benchmark supply beyond today, but agreed that the market had got off to a poor start.

“The market looks terrible,” said one. “It’s one of the worst days in recent weeks and the market feels as bad as at the back end of last year.”

However, he said there is a fundamental difference with this period, in that at this moment there is no pending deluge of supply, with many issuers having raised their funding for the year.

Another said today is not a day for “heroics”.

Credit indices and peripheral government bonds were said to be wider, with safe havens such as Bunds, Gilts and Treasuries conversely benefitting from a flight to quality – the Bund future reached yet another all-time high today.

Fotis Kouvelis, leader of Greece's Democratic Left, ruled out possibility of unity government

There is no shortage of developments for market participants to wade through and digest, according to a syndicate official, citing public contemplation over the weekend by European Central Bank officials of a potential euro exit by Greece, a defeat of German Chancellor Angela Merkel’s CDU in regional elections on Sunday, Fitch cutting JP Morgan after the bank announced a $2bn loss on Thursday, and uncertainty around 3CIF and CIF Euromortgage as a few themes.

“We definitely are not falling short of negative headlines these days and still, the sell-off in markets seems muted in the context of negativity,” he said.

And despite today’s grim markets there may still be opportunities for benchmark covered bond supply this week, according to syndicate officials.

One said that that he is optimistic an issuer could bring a deal if it wanted to, albeit with higher new issue premiums and spreads, adding that although it would not necessarily be advisable, it could appeal to an issuer wanting to demonstrate strength.

Another said that the market is not closed, and that he was aware of a couple of issuers that could consider coming to market should conditions improve.

“We need a reopener that brings back confidence,” he said, adding that while today was a “black” day the rest of the week need not follow in this vein.

“There will be days of stability, of recovery,” he said.

A possible deal for France’s Caisse de Refinancement de l’Habitat came under discussion last week in the context of the implications of a trading suspension of CIF Euromortgage covered bonds, with a syndicate official saying he thought CRH could come to market, with a starting point of some 5bp-10bp wider than the 100bp area it might have come at for a 10 year deal before the CIF trading suspension rattled markets.

Another syndicate banker said that CRH covered bond spreads had stayed relatively stable in the secondary market while other French covered bonds suffered more, and that there had been a small rally in 3CIF and CIF Euromortgage bonds.

Another syndicate banker said that a “decent” issuer could come to market this week, but that a public holiday in parts of Europe on Thursday means tomorrow (Tuesday) or Wednesday are the main issuance opportunities and that he was not aware of any issuers “sniffing”.