The covered bond market will remain quiet early this week, market participants expect, with some German regions on holiday and issuers possibly awaiting the outcome of debt negotiations between Greece and its EU creditors today (Monday).

One core issuer is said to be eyeing the market with a view to launching a seven or 10 year trade this week, but syndicate officials said they anticipate activity will remain muted until parts of Germany return to work on Wednesday after marking the traditional Carnival (or Karneval, in German) holiday.

“There is no market today, everybody is out celebrating,” said one banker, who noted that other markets are also quiet, with Bund futures going sideways and stocks mostly flat to where they were at the close of last week.

Some issuers may be put off by the Greece talks in Brussels, he said, but other considerations are likely to be more influential.

“The market is made up of true cynics,” he said. “No one believes that a Grexit will happen. It doesn’t rock anybody’s boat.”

Another syndicate official agreed that, of the two factors, Carnival is likely to have the more significant impact on market activity.

“You could execute now,” he said, “but Germany would typically make up half of your order book. So why rush?

“Issuers might be waiting for Greece, but Greece is not something you need to wait for.”

Issuers also appear to be focusing elsewhere, he added, noting that while the covered bond and senior unsecured markets are subdued the AT1 market could be set for another busy week, while more Tier 2 deals are expected.

“Covered bonds aren’t first on banks’ agendas,” he said.

Another banker said he did not think Carnival is having too much of an impact, noting that German banks are well staffed. He instead point to other factors, observing that some banks have only just returned from blackouts while pricing is not competitive for Swedish and UK issuers.

“Most issuers seem to have already done their big first quarter trades, so we are not expecting much,” he added.

He meanwhile remarked that benchmark covered bonds launched last week have all performed well on the secondary market. He noted that a Eu500m 10 year NordLB benchmark priced at minus 18bp was trading at minus 19bp, mid, a Eu1bn five year CFF deal priced at minus 8bp was trading at minus 10bp, and a Eu1bn 12 year NAB deal priced at 18bp over was trading at 15.5bp-16bp.

“They show the market is in good shape, which is frustrating when there aren’t many people around to look at it,” he said.

Alongside Carnival in Germany, another banker suggested that the celebration of Chinese New Year on Thursday could have an impact on market activity.

“The covered bond market is also strong and that’s not looking likely to change,” he added, “so issuers aren’t feeling rushed.”