Sparkasse KölnBonn teed up a reopening of the euro covered bond market tomorrow (Wednesday) by announcing a mandate for a Eu500m seven year issue this afternoon, but bankers said other issuers may wait even if conditions are stable in spite of negative news from Greece.

After finishing a roadshow on Thursday, Sparkasse KölnBonn today (Monday) published a mandate for the Eu500m no-grow mortgage Pfandbrief via leads Barclays, Deka, Helaba, Natixis and UniCredit.

The planned issue has been pegged as the likely reopener of the euro covered bond market, after an absence of new deals since 29 April. Syndicate officials away from the leads said they expected the deal to go well, provided it offers a sufficient new issue premium, and added that market conditions appeared to be conducive for new issuance.

A successful Eu750m five year senior deal this morning from Danske, which attracted Eu1bn of orders after one hour and closed with books at Eu1.2bn, showed the euro FIG market to be open, said a syndicate official away from that deal.

Furthermore, negative headlines regarding Greece had been discounted by the wider market after having initially been negatively received, bankers said. One noted that equities had been down by about 0.75% in most jurisdictions, but were now flat to where they had been previously.

However, bankers said that although issuers from both core and peripheral jurisdictions were looking at new deals, there was no clear pipeline.

“Issuers are just not hungry for fresh money,” said one syndicate official, noting that most issuers that needed new liquidity had done deals in Q1.

“It makes sense for most issuers to keep their powder dry, and wait for what should be a more productive second half of the year.”

Another syndicate official agreed, stating that many issuers were not willing to pay the necessary premium to launch a benchmark in prevailing conditions.

Stating that Danske’s deal offered a significant new issue premium, the syndicate official said the senior trade offers an example for the first euro covered bond benchmark.

“I think this shows the way to get the next euro covered done should be to stick a big premium on it,” he said. “I think we should be talking around 5bp at the least.”

Meanwhile, after some issuers had turned to the sterling and dollar markets while the euro market were volatile, syndicate officials said issuers would likely focus on the euro market once more if Sparkasse KölnBonn’s deal is well received.

“The sterling and dollar markets are alternatives, but both have seen quite a lot of supply recently and there is currently no price advantage,” said one.

He said that dollar investors in particular appeared to be increasingly price sensitive, noting that recent dollar-denominated trades from Swedbank, DNB and ANZ had all been priced at 37bp despite coming from different jurisdictions.