Belgium’s Belfius is poised to launch the first new benchmark covered bond this week, having today (Monday) announced a mandate for a five year issue, with syndicate bankers expecting it to be joined by other issuers but for supply to emerge at a slower pace.

Bank of America Merrill Lynch, Crédit Agricole, Commerzbank, and Nordea will be working alongside Belfius as lead managers of the five year mortgage-backed issue, which will “most likely” be launched tomorrow (Tuesday), according to a syndicate official at one of the leads.

“The market is looking fine to a bit softer, but fine for this kind of product,” he said. “There is no sign of competing supply so it should be clear from that point of view, too.”

Belfius last came to market at the end of May 2013, with a Eu500m seven year that was priced at 17bp over mid-swaps. The 1.375% June 2020s are trading at 17bp over and 1.25% November 2017s at 6bp over, putting fair value at around 11bp over for a new five year, according to the banker.

Syndicate officials away from the leads suggested 11bp-12bp and 12bp-15bp over as fair value for a new Belfius 2019 issue.

The last Belgian benchmark covered bond to hit the market was an inaugural issue for ING Belgium on 3 December, which sold a Eu1bn five year at 10bp over. That is trading in the high single digits, said a syndicate banker.

The FIG markets were quiet today, with no new issues being launched, but syndicate bankers said they expect a few covered bond deals to hit the market this week. Market sentiment was slightly softer this morning on the back of some disappointing earnings results but not materially so and liquidity remains plentiful, according to syndicate officials. Today is a public holiday in the US.

“The sense is that today is not the ideal day,” said one, “but I expect deals this week. There’s no logjam so issuers are taking their time looking at the market.”

Another said that investors are beginning to push for larger new issue premiums, but that there is no generic trend and that the size of any concessions will vary depending on individual deal characteristics.

“It’s on a case-by-case basis,” she said.

She put the average new issue premium on euro benchmark covered bonds sold so far this year at 2bp-5bp, based on re-offer spreads.

Euro benchmark covered bond supply has fallen from Eu8.75bn across nine issues in the first full working week of the year to Eu4.5bn across five deals last week, and a syndicate banker said he expects the pace of new issuance to slow and stabilise, with issuers also heading into blackout ahead of earnings announcements.

“Business will be more selective this week,” said one, “but I wouldn’t be surprised if there were three to four deals.”

The only other primary market-related project in the covered bond pipeline are investor meetings for Commerzbank in relation to its SME structured covered bond programme.

The bank has mandated Crédit Agricole, Credit Suisse and Deutsche Bank on top of its own investment bank, with meetings set to take place from tomorrow to Friday, according to a banker at one of the leads.