At least two euro covered bonds are expected to be launched early next week, one from Aktia and another from a peripheral issuer, and bankers anticipate a better market for new issues after a week of wider market weakness hindered the execution of two new benchmarks on Wednesday.

Having mandated Crédit Agricole, JP Morgan, LBBW and Natixis to hold a series of European investor meetings this week, Aktia Bank is likely to launch a 10 year euro-denominated benchmark covered bond early next week, according to a syndicate official at one of the leads.

A peripheral benchmark is also expected to come early next week, and a banker away from the deal said it is likely to be a 10 year.

On Wednesday new issues from CaixaBank and Nationwide Building Society fell short of expectations, with both pricing in line with initial price thoughts and guidance amid wider market weakness.

A syndicate official said market participants will now be reassessing what the outcomes of the deals mean for the market.

“People need a breather,” he said. “If you look at the two deals from Wednesday they both offered fair new issue premiums, but for CaixaBank, for example, if you consider the rates environment and how much spreads have tightened in Spanish paper then the deal just wasn’t that compelling.”

Noting that many issuers had recently opted for maturities of 10 years or longer, the syndicate official suggested five or seven years may be the new sweet spot.

“If trades next week have generous new issue premiums and the right tenor they will go well, no problem,” he said. “But if issuers push it then investors will push back. There is more spread sensitivity now than there was a few weeks ago.”

He added that he would be surprised to see any covered bonds launched on Monday.

“I think issuers will be mulling things over,” he said. “Later in the week I expect we’ll see more cautious trades with defensive maturities.”

Another syndicate official said he expected the market to be more accommodating of new deals next week.

“The FOMC meeting on Wednesday provided a good excuse for investors to remain on the sidelines but now we have passed that hurdle markets are slowly becoming more constructive,” he said. “On the covered bond side there is some selling activity in secondary markets but spreads are holding steady and the new issues from Nationwide and CaixaBank are only marginally wide of reoffer.

“The technicals in the covered bond market remain strong and should the broader backdrop stabilise there is no reason new issues won’t be well received. If you pay the right premium and use the right strategy, investors will still want to put their money to work.”

Another syndicate official agreed, suggesting that some of the factors contributing to the softened market may no longer be an issue next week, citing Wednesday’s FOMC meeting as an example.

“It’s been a strange week,” he said, “but hopefully the market will be in better shape on Monday.”