In brief: There was talk of a new covered bond issue emerging before the end of the week this (Wednesday) morning, following the beginning of an improvement in sentiment yesterday after a tough start to the week.

“I wouldn’t rule out seeing a covered bond transaction this week,” said a syndicate banker who said such a move was being considered. “If the market improves further, as it has been doing today, then I could imagine it would be the right time to see a mandate.

“The market was not so good at the beginning of the week, but it could be coming back to normal.”

Another syndicate official said he was surprised a deal was already being considered.

“Things are slightly better in the broader markets, with equities improving already from yesterday afternoon, but credit was still going wider and there was selling across the board,” he said. “Things aren’t so bad today, but it’s still a bit early to go ahead – unless they know something we don’t.”

Some encouragement was drawn from primary market activity, with a Bund-Laender-Anleihe seven year benchmark in the market.