The covered bond market remained quiet today (Tuesday) despite improved sentiment, with core issuers said to be mulling deals while bankers warned that any volatility caused by a loan repayment due on Thursday from Greece to the IMF could have an impact on new trades.

Syndicate officials said the market is today in better shape than it had been, noting difficulties faced by some deals in recent weeks, but suggested primary activity is likely to get off to a slow start with some desks not fully represented after an extended break for Easter holidays in some jurisdictions.

“The market certainly feels more positive this week, but there has been nothing on the FIG side to really test that,” said one. “There is no real reason to not do deals now, but people just seem to still be working out how many people are in offices today.”

Two or three core issuers are looking at the market ahead of possible trades, said a syndicate official. He noted that the first window for execution following the Easter holidays would be to announce this afternoon and launch tomorrow, but added that deals are not certain to launch this week.

Syndicate officials said headlines regarding a Greek government repayment of around Eu450m due to the IMF on Thursday could convince some issuers to hold off launching deals.

“The headlines suggest there will be no problem, but with Greece it can always be more volatile than you first expect,” said one banker. “The odd negative headline might come out on Wednesday saying Greece isn’t going to pay up and that would put issuers off.”

“If you’re an issuer and you have the flexibility to launch at any time in the next few weeks, why would you go on the day investors might be hesitant? It’s not likely to have any impact on the covered bond market, but if you were trying to build a book? Maybe.””

Another syndicate official noted the timing of the repayment also splits an already-shortened week.

“It creates a window of today and tomorrow where deals can be done,” he said. “There could be some activity then, but there is nothing on the screens now, so it looks like a quiet week.”

A syndicate official suggested that any new deals launched this week are likely to offer a new issue premium of around 3bp-4bp, as issuers try to avoid difficult execution, with issuers also likely to steer clear of the long end of the curve after seeing trades with tenors of more than 10 years disappoint in recent weeks.