Barclays Bank opened the covered bond market for 2015 this (Monday) morning, going out with a three year sterling FRN that is set to be executed this afternoon, but holidays in continental Europe tomorrow ensured the seasonal euro benchmark break dragged on.

Italy, Spain and parts of Germany are among the areas with public holidays tomorrow (Tuesday).

Barclays was nevertheless quick out of the blocks in the new year, announcing its plan to issue on Friday (2 January) and then going out with initial price thoughts for the three year sterling floating rate note this (Monday) morning via itself and ABN Amro, Commerzbank, Nykredit, Santander and Société Générale. IPTs were the three month Libor plus 20bp area and demand was already at £750m (Eu958m) by 1100 London time.

A syndicate official away from the leads said that the IPT phase was longer than usual, but that this made sense given that many accounts were only back at their desks today and therefore unable to make any decisions before late morning.

“There is no need to rush it,” he added.

He said that the 20bp area level made sense and that he had on Friday considered that a £500m at plus 18bp would be achievable.

“Twenty was the right number to start with,” he said, “and then they can tighten it depending on the size.”

The UK bank on 8 September issued a £1.5bn three year FRN at 19bp over Libor amid a flurry of short dated sterling supply, and this was said to be bid at 18bp over this morning. The last such trade was a £250m three year FRN for Bank of Nova Scotia on 28 October that was priced at 19bp.

Another banker away from the leads said that Barclays’ new FRN looked set to come slightly inside comparable euro fixed rate levels, although euros were more favourable in longer maturities than three years.

The last euro benchmark covered bond was a Eu1bn long seven year benchmark for Cariparma on 3 December and syndicate officials said today that the European holidays tomorrow should ensure that the hiatus lasts for at least a couple more days.

“A couple of senior deals are definitely in the mix, but this week could be relatively quiet on the covered bond front,” said one, “although I’m sure there will be issuers who want to get something done.”

Nordea Bank Finland was the first to announce a mandate last year and another syndicate banker said that the “usual suspects” were candidates, adding that French issues were among those eyeing the market.

Market participants said that the market should be open despite “Grexit” risks having risen, with a Greek election due on 25 January after a final parliamentary attempt to select a president failed last Monday (29 December). Some bankers said that the market had opened a little weaker this morning, but that the impact on covered bonds should be limited.

Greece, as well as a governing council meeting of the European Central Bank on 22 January that could deliver sovereign QE, were seen as increasing uncertainty as the month progresses, and a syndicate official said that issuance this week would make sense.

“I guess any strong issuer in covered bonds will not have big execution risk these days, especially when you are a European issuer with the covered bond purchase programme,” he said. “It’s just a question of how much premium will be required to make the relative value point attractive to investors and to ensure that you have a strong and diversified order book in place and you can attract some real money investors.”

Another syndicate official echoed this, highlighting that the new issue premiums necessary to attract real money could be higher than issuers have been used to paying. He said that the absolute level or rates was also a concern, with the 10 year swap rate, for example, having fallen from around 0.95%-1% before he headed off on holiday to around 0.75%, with much of that move having come after the failed Greek vote last week and comments from ECB president Mario Draghi about deflation fears.

The ECB meanwhile last Monday announced a Eu1.131bn increase in settled CBPP3 purchases to 26 December, taking them from Eu28.529bn to Eu29.660bn. The respective period only included a couple of days of potential buying given that the programme was suspended from 22 December to last Friday, which should also mean that no increase is announced this afternoon.

A banker said that the secondary market was “very, very slow today, with nearly nothing around – even the ECB is still in sleeping mode”.