Syndicate bankers are hopeful that euro benchmark covered bond supply could resume next week after more than a fortnight without a deal, with a debut SME backed deal from Commerzbank also considered possible after the bank reported results today (Friday).

The last euro benchmark covered bond was a Eu1bn deal for Berlin Hyp on 29 January and RBS analysts said today that the hiatus since then represents the longest period without such supply since 2008, excluding Decembers.

“We are well in line to beat the negative record of February issuance established in 2009,” they added, saying that just Eu2.7bn hit the market through two benchmarks and small taps that month.

Bankers have this year cited low covered bond funding needs on the part of issuers as one reason for the pause, while a syndicate banker said this week had been quiet because investors and issuers were “picky” in terms of levels and timing.

However, another syndicate banker said that covered bond supply is set be higher next week especially after the launch yesterday (Thursday) of a Eu500m senior unsecured issue by SpareBank 1 SMN that attracted Eu1.3bn of orders.

“It’s the first good sign for the entire market,” he said. “On the back of this transaction and of the positive tone of the market there could be a potential market window again for covered bonds next week.”

An inaugural SME covered bond by Commerzbank off a new structured programme – which has been rumoured since a mid-January roadshow with leads Barclays, Commerzbank, Crédit Agricole and UniCredit – could also emerge next week, according to some bankers. After the roadshow, a Commerzbank had official said it was digesting feedback from investors before proceeding.

A syndicate banker pointed out that Commerzbank has just exit its blackout period, so the possibility of the launch of the SME deal next week should not be excluded. Commerzbank reported its annual results today (Friday).

Some syndicate officials said that pricing would be key to the deal’s timing.

“Commerzbank is looking at certain levels and will not settle for less,” suggested one, “so they will go ahead only if they are sure that they will be able to achieve the level they want.”

Another syndicate banker said he understood that feedback from investors since the roadshow suggested the issuer might not achieve much better levels than senior unsecured funding, and that this was wide of where the deal might originally have been pitched, closer to core, but non-German legislative covered bonds.

“Obviously German Pfandbriefe trade really tightly, so I guess they are considering if it really makes sense for them to proceed with a transaction that would inevitably be wider,” he said.

Commerzbank has said it could also issue its first Pfandbriefe in the second half of the year.

SEB has also been cited as an issuance candidate for next week and a syndicate official said that Swedish issuers would be among the best positioned because of favourable spreads levels, with SEB being “only one of the strong names among them”.

And he added that a covered bond issue of “even better quality” than the Nordics is set to be placed next week.

A syndicate banker also mentioned French levels as attractive, potentially leading to some French issuers tapping the market next week.

Another said that he expects issuers coming to market next week to target the medium to long end of the maturity curve, from five to 10 years. Commerzbank’s SME deal was flagged as a five year in rating agency reports.