Kutxabank is set to return to the market next week with its first euro benchmark since January 2013, according to a lead syndicate official, but this aside there are limited expectations for covered bond issuance next week, with peripheral concerns having resurfaced.

The Spanish issuer yesterday (Thursday) completed a series of investor meetings with mandated banks BBVA, Commerzbank, Crédit Agricole, HSBC and Nomura. According to a syndicate official at one of the leads, Kutxabank intends to issue its first benchmark covered bond since a Eu750m four year in January 2013 next week.

He said that CaixaBank’s curve will be used to assess pricing. Another syndicate banker said that Kutxabank’s four year issue is trading at around 44bp over mid-swaps, while CaixaBank is trading at 42bp in the same maturity.

The lead syndicate banker nevertheless noted that the backdrop could be difficult.

“The plan is to issue next week, but we need to act prudently and assess how the market is trading,” he said. “This is a name that is very rare and we want to tread carefully.”

His comments follow a difficult two days for the peripheral markets, with one syndicate banker noting that a “nervousness” surrounding the outcome of upcoming Greek elections caused by a loss of support for the governing coalition had impacted levels for peripheral bonds.

“This nervousness has had a knock-on effect in the peripherals,” he said. “And created a nervousness in the markets, which saw rates rally even more.

“However, the argument would be that such difficulty is beneficial for covered bonds, which are viewed as something of a safe haven.”

Another syndicate banker said that peripheral trades had “really underperformed” over the last two days, and suggested the need for “a bit of a break” before any peripheral issuer sought a market return.

Away from Kutxabank, little issuance is expected next week, according to syndicate officials, with one noting that the difficulty surrounding the peripheral markets will need to be assessed.

“People will want to see whether the blip experienced in peripherals yesterday and today was just that, a blip, and not a sign of things to come,” he said.

However, he added that with the Netherlands’ ABN Amro today (Friday) the latest bank to have announced results and more banks still to exit blackouts, there was potential for further issuance and from the Nordics, in particular.