KBC Bank is a likely candidate for a new benchmark next week and French issuers are eyeing the market, according to syndicate officials, who expect recent strong primary market momentum to be maintained.

Belgium’s KBC Bank has been considering issuing its second euro benchmark of the year, according to syndicate bankers, following what they said was as a successful transaction from Belfius, a Eu500m 10 year that leads Barclays, BBVA, Belfius, BNP Paribas, NordLB and WGZ Bank priced at 25bp over mid-swaps on Monday.

“Thinking about names for next week, KBC Bank would be an obvious choice,” said one syndicate banker. “They have been looking at the market, so it would make sense given how Belfius performed.”

He added that Belfius and KBC Bank trade much in line, and that investors would be using the Belfius deal as a guide to what to expect from a KBC trade. By way of further comparables, the syndicate official gave a KBC 2019 at 5bp over, a Belfius 2019 at 3bp over, and KBC and Belfius 2020s, both at 11bp over.

“There has been no weak deal yet in June, supply and demand seem to match up,” he said. “Until we have our first bad deal of the month, I think issuance will continue on a similar track.”

Syndicate officials also said that French issuers had been considering coming to market, with one noting that “the French can shoot very quickly, without any warning” when it comes to covered bond issuance.

Another syndicate official said that given the low yields, with coupons from German and other core issuers coming in below 1% in short to medium maturities, he would be surprised if any issuer opted for a deal short of seven years, and that he expects issuers to continue to build their long dated presence through the next three to four weeks.

“I do not see much movement on the yields we have had recently, and I believe that they are sustainable,” he added. “That said, these longer dated maturities with the low coupons are much more appealing to treasuries over real money investors, as can be seen by the composition of the investor pools.”

A further syndicate banker agreed that the low yields are sustainable in the short term, based on the performance of recent transactions and the potential for limited supply.

In addition to Belfius’s deal, Berlin Hyp, BPCE, Münchener Hypothekenbank, Nationwide Building Society and Westpac came to market this week, with the latter issuing a dual-tranche Eu1bn five year and Eu750m 15 year. In total, Eu5bn of covered bonds were issued this week, across seven transactions (taking Nationwide’s dual trancher as two), making it the second busiest week of the year, following the opening week of January, in which nine deals were issued. Total issuance for June has reached Eu12.25bn.

A syndicate banker said that while he expects the momentum to continue through next week, the start of the Nordic holiday season with the arrival of Midsummer may result in a reduced investor and issuer base.