Terra BoligKreditt is holding off pulling the trigger on a euro benchmark covered bond in the face of a lacklustre market today (Monday) and need not rush to market given an otherwise empty pipeline, said bankers, while – depending on hurricane Sandy – dollar supply could resume this week.

Norway’s Terra was on a roadshow last week, but was unconvinced by market conditions this morning, which syndicate officials said were not the best for the launch of a new issue, particularly in the absence of competing supply.

Leads BNP Paribas, Commerzbank, Natixis and UniCredit will hold a call with the issuer this afternoon, with some investor work still going on, according to a syndicate banker on the deal.

Another lead syndicate banker said that a deal will only hit the market if conditions are favourable, which was not the case today, and that decisions about the size and maturity of a deal had not yet been taken.

“The market is unchanged, but a bit weaker here and there,” he said. “For now we’re monitoring the situation. We’re relaxed.”

Others were taking the same approach, he added, noting a lack of competing supply.

Global stocks sold off up to 2% and European credit indices widened over the course of last week, with some profit-taking in peripheral senior unsecured and covered bond markets but core spreads stable given a lack of supply.

A syndicate banker away from the Terra leads agreed that the market backdrop is not ideal for new issuance.

“People are holding off and waiting for the right session,” he said. “The market isn’t too great, although technical are still supportive.”

Terra would have a two day window in which to tap the market this week, according to syndicate bankers, with Thursday a Roman Catholic public holiday in parts of Europe and Friday set to be dominated by non-farm payrolls.

Also contributing to the subdued market tone this morning is the knowledge that US market activity will be restricted today because of Hurricane Sandy – stock and options markets will be closed all day, while bond markets will close at midday.

This could affect new issuance plans in the Yankee market, with a covered bond banker last week having said that new supply could be launched as early as this week.

Spreads have levelled off, she said, but some issuers are looking to launch deals, in part to take advantage of momentum created via roadshows and a recent industry conference.

“There is a sense that now might be the time to move ahead,” she said, noting that November does not offer that many issuance opportunities given the presidential election on the 6th, a bond market holiday on the 12th, and interruptions around Thanksgiving.

Photo: National Oceanic & Atmospheric Administration