New covered bonds should find demand if issuers prove willing to pull the trigger rather than wait in hope of better times, bankers said today (Monday), with the market in better shape than last week when sentiment was rocked by a Portuguese government crisis.

Resignations of Portugal’s finance and foreign ministers put pressure on the country’s government bonds last week amid concerns the government could collapse, with yields at one stage hitting 8% but back down to below 7% this morning, according to a syndicate official.

“The periphery has been recovering quite a bit,” he said. “The central bankers are trying to be reassuring.”

The European Central Bank and Bank of England held meetings on Thursday, with their respective heads, Mario Draghi and Mark Carney, breaking with tradition by providing markets with forward guidance about the direction of interest rates.

Most prominent in the pipeline is Caisse Française de Financement Local (Caffil), which finished a roadshow on 28 June, and is expected to make an announcement about its next step soon, possibly early this afternoon. Barclays, BNP Paribas, Deutsche Bank, HSBC and Natixis have the mandate.

A syndicate banker away from the leads said he would expect intra-day execution for Caffil, and that there is “definitely” scope for the issuer to do a deal this week.

“The covered bond format should find demand,” he said. “The secondary market is picking up a bit.

“This morning the tone is better after good non-farm payrolls on Friday, but FIG issuers are taking their time looking at the market.”

Another syndicate official said that the market is still shakier and softer than it was several weeks ago, and that the need to show an attractive level – at least at the beginning of deal execution – could be putting off some issuers.

“The question is whether waiting leads to a better market,” he said.

Another syndicate banker said that he does not expect any new benchmark covered bonds today, and that issuers are not under pressure to come to rush to market. He cited issuers such as New Zealand’s ASB Bank and Raiffeisenlandesbank Niederösterreich-Wien, which finished and postponed roadshows, respectively, in this context.

“General market sentiment is slightly better today, and I wouldn’t rule out deals in the next two to three weeks,” he said, “but things are relatively relaxed.”