National Bank of Canada is set to decide today (Monday) whether or not to launch a benchmark covered bond this week, which syndicate officials say is the final opportunity for new supply this year, with liquidity thinner but the market still looking open.

The issuer came out of blackout when it released its fourth quarter results on Wednesday and it then picked up a roadshow that it had started in early November by carrying out marketing in London on Thursday and Friday. BNP Paribas, Commerzbank, NBC Financial Markets and RBS have been working with the issuer.

A deal for NBC, expected to be in euros, is the only outstanding mandate in the public pipeline in benchmark covered bonds, after ING Belgium priced its inaugural deal last Tuesday.

A euro deal would be NBC’s first in the currency and also its first under Canada’s new legislative framework. NBC’s programme was registered with Canada Mortgage & Housing Corporation (CMHC), which is administering the legislative regime, on 1 November. Royal Bank of Canada and CIBC are the only Canadian issuers to have hit the market with new legislative covered bonds this year.

The NBC leads and the issuer will this afternoon (CET) be deciding whether or not to proceed with a deal this week, according to a syndicate official at one of the leads.

“If it’s going to happen this year then this week,” he said, adding that there were many factors to weigh up.

On the one hand liquidity is noticeably thinner, investors are more reluctant and a higher new issue premium would be required, he noted, while uncertainty about a possible start to tapering in the US this month means that it is not clear a deal would necessarily fare better in January.

“It might go better, but at wider levels,” he said. “It’s an open question as to whether January is better. We’ll see.”

The US posted better than expected non-farm payroll figures on Friday to reignite speculation about the Federal Reserve beginning to rein in its quantitative easing programme at the time of its next meeting, on 17-18 December.

Most syndicate bankers said that this is the last week for new covered bond issues, although one said that it was already too late in the year for a jumbo covered bond.

“Most investors have closed their books,” he said.

The others were more positive, however, saying that market conditions are stable and that deals are still getting done, such as a Eu1bn three year senior unsecured transaction for Italy’s Intesa Sanpaolo. Société Générale has announced an Additional Tier 1 transaction in US dollars, and Sumitomo has announced a seven year transaction.

More than Eu2.2bn of orders were placed for Intesa’s deal, which will be priced at 158bp over mid-swaps, the tight end of guidance of 160bp over plus/minus 2bp.

“It shows that liquidity is still there,” said a syndicate official.

Another said that the market is open for NBC to do a deal this week.

“It would have been a waste of time otherwise,” he said.

NBC issuance would start back of RBC and CIBC in terms of spread levels, he said, noting that CIBC issuance has traded well.