Riskier credits were said to be asking for pricings on potential new covered bond issues today (Friday) after the unveiling of a new European Central Bank government bond buying programme yesterday cheered markets.

ECB president Mario Draghi announced the Outright Monetary Transactions (OMTs) at a press conference yesterday (Thursday) afternoon following the monthly meeting of the governing council of the central bank, confirming hopes raised by comments made a month ago.

A syndicate official said that old projects were being “dusted off”, with the number of discussions about potential new covered bond issues having gone up substantially after Draghi’s announcement.

A covered bond banker said that a lot of pricings were going on today, with lesser credits asking if the market would be open to them.

“The rally in Spanish and Italian governments probably means that most names would be open at some level, if they are willing to pay it,” said a covered bond banker. “Could it – dare I say it – stretch to Portugal?”

The most recent peripheral covered bond benchmark was a Eu750m long five year OBG for Italy’s UniCredit on 14 August, while Spanish issuers have not tapped the market since March and Portuguese banks have been absent all year. Spain’s Banco Santander was already out with a three and a half year senior unsecured FRN today.

Another was optimistic about the prospects for any new issues.

“There’s definitely a market that is better bid,” said one. “Liquidity is awful. And on that basis, and with the market this hot, I’d say that trades work.”

However, some syndicate officials said that there are few signs of firm plans for issuance.

One said that, with core covered bond markets having already been stable and open, and likely to remain so even if sentiment turns, some issuers may prefer to access the senior unsecured markets now and keep covered bonds as a back-up.

“If this window holds this well, if senior is open to you, then that may be a preference,” he said, “because you’d probably say there’s a little bit more longevity to the stability of covered bond spreads than senior if there is any bad news.”

But he was positive about the outlook.

“It feels like we are getting towards some sort of resolution whereby you can expect a quite stable market into the end of the year whereby spreads will continue to grind tighter,” he said.

The German constitutional court is set to rule on Wednesday on European Stability Mechanism. This had previously been seen as a key date and bankers said anything except a positive outcome could disrupt markets, although a consensus appears to have emerged suggesting that the ruling will be favourable.