ASB Finance, a New Zealand subsidiary of Australia’s CBA, is set to renew primary market activity after having mandated for an inaugural euro benchmark, while expectations for other supply were mixed among syndicate officials this (Monday) morning.

ASB Finance Limited has mandated Barclays, Commonwealth Bank of Australia and UBS to lead manage a five year euro deal. The mandate hit screens today, and further steps, be they an indications of interest process or deal launch, are planned for tomorrow, according to a lead syndicate official.

Another syndicate banker was optimistic that ASB would not be the only issuer to tap the market this week, referring to ASB’s move as a “door opener”, although other bankers appeared less convinced other issuers would be willing to enter the market.

“It’s unlikely,” said one. “There are too many potential disruptions from a macroeconomic point of view, the summer holidays are about to start, and the market is relatively volatile.”

Another said that despite several projects being in the pipeline he does not have the impression issuers are ready to move.

EU leaders meet for another summit on the euro-zone crisis on Thursday, when Italy will sell five year and 10 year bonds.

The market is weaker today in comparison with a positive spell last week, with equities at one stage this morning down 2% and the Bund Future up at 142, but a syndicate banker said that tomorrow (Tuesday) could be a “reverse day”.

“The market environment isn’t ideal today, but I think covered bonds would still be soaked up because investors are cash rich, and tomorrow might be better,” he said.

ASB has already issued covered bonds, tapping the Swiss franc market earlier this year, for example, but – unlike New Zealand peers ANZ National, BNZ and Westpac NZ – has yet to sell a euro benchmark.

The bank is understood to have been on the road two weeks ago, with Barclays, although the roadshow was not publicly announced. A lead syndicate official said that first reactions to the mandate announcement have been positive.

A syndicate banker away from the leads said he expected a deal to go well, and that accounts will appreciate an opportunity to diversify their holdings by investing in non-euro-zone supply when there has not been much recent benchmark supply in general, despite investors being cash rich.

The last new euro benchmark was a Eu650m seven year for Norway’s Terra BoligKreditt on 12 June, although France’s Caisse de Refinancement de l’Habitat followed that up two days later with a convincing, Eu750m tap of a 2024 issue.

An outstanding CBA Eu1.5bn January 2017 issue and outstanding euro New Zealand benchmarks are likely to serve as pricing comparables for ASB’s transaction, which a syndicate banker away from the leads suggested could come in the mid to high 60s over mid-swaps.

“The 70bp over area might be a starting point, but the roadshow was good so it will probably price inside that,” he said.

A lead syndicate banker put CBA’s January 2017 at 40bp/35bp and said that most New Zealand euro deals were trading in the context of 65bp/60bp or tighter.

The last New Zealand new issue in euros was a Eu500m three year for BNZ International Funding Limited that came at 113bp over mid-swaps at the end of January.

NordLB today starts a roadshow in connection with aircraft Pfandbrief issuance plans.