Broader market conditions deteriorated this (Tuesday) morning to the point that a new issue move in euros would be “reckless”, according to a syndicate official, although in Swiss francs CRH was able to price a tight Sfr150m (Eu122m) 12 year issue.

Markets have taken a volatile turn, and the mood is negative today, according to syndicate bankers, who variously cited indicators such as Greek 10 year government bond yields being up to 10%, equities down 1%-2%, 10 year swap rates 7bp higher, and the iTraxx Crossover 30bp wider.

“The market is pretty nasty,” said one. “There are signs of life in corporates but in euros in covered it would be a bit reckless to do something. Yields keep spiking and there is a lot of pain in the emerging markets arena.

“There’s a fear that the rally is over and that QE is ending, with rates going up.”

In euro covered bonds RBS analysts said that their traders are reporting continued selling pressure, with spreads 2bp-10bp wider across all jurisdictions.

“While tightening over the last few weeks had been driven by small sizes, the selling pressure is now driven by bigger sized clips,” they said.

A syndicate banker said that bond market sentiment will continue to be influenced by global quantitative easing expectations, and that although yields may soon reach attractive levels, sentiment does not for now appear supportive. There were no SSA, emerging market or FIG deals yesterday (Monday), with corporates the only source of new supply.

Caisse de Refinancement de l’Habitat priced a Sfr150m 12 year covered bond today despite the markets being in risk-off mode, which a lead syndicate banker said was an achievement even though orders did not go beyond the Sfr150m minimum size target.

The issue was priced at 25bp over mid-swaps via RBS and UBS on a retention basis, and was launched to satisfy Swiss franc refinancing needs on behalf of CRH’s shareholder banks.

Henry Raymond, chairman and chief executive officer of CRH, acknowledged that the market “is not good”, but said that the issuer is fortunate to be able to launch deals even amid poor conditions.

“A good market is preferable, but CRH is a long term player so the ups and downs of the market are of marginal importance,” he told The Covered Bond Report. “It was a small transaction, but a proper one.”

A lead syndicate banker said that the deal was launched for Sfr150m minimum, and that a softer duration bid in response to the rise in interest rates may explain why orders did not exceed the minimum size target.

At 25bp over, the deal was priced 1.5bp inside secondary market bid levels, he added, putting a March 2.375% 2024 issue at 25bp/23bp over pre-announcement.

“In the Swiss franc context that’s a great price,” he said. “Equities are selling off and credit indices are wider so getting a trade done in this market is a success.”