Swedbank is expected to launch a US dollar-denominated five year Reg S issue tomorrow (Wednesday), while bankers expect issuers to be hesitant when considering the euro market despite signs the market has stabilised after a volatile end to last week.

Swedbank announced the dollar issue this (Tuesday) morning for likely execution tomorrow, according to a syndicate official at one of its leads. Citi, Credit Suisse, HSBC, RBC and Swedbank have the mandate.

The most recent 144A dollar benchmark was a $750m (Eu672m) three year deal launched on 14 April by National Bank of Canada and on the same day BayernLB sold a $500m three year Reg S Eurobond. Swedish peer Stadshypotek sold a $1bn five year 144A issue on 2 April.

A syndicate official at one of Swedbank’s leads saw Swedbank March 2018s at 26bp over mid-swaps, bid, and Stadshypotek April 2020s at 36bp.

He added that the basis swaps to dollars appears to be supportive for the new deal.

“The US dollar market does look competitive at the moment,” he said.

“What we’ve learned over the past month is that the covered bond is a global product, with the balance of issuance across currencies,” he added. “I do think the volatility we’ve seen in euro rates could make other issuers more minded to look at other currencies in the coming weeks.”

Meanwhile, after a volatile market backdrop caused disruption at the end of last week – with market participants citing a Bund sell-off as a factor behind a Bank of Ireland Eu1bn seven year deal attracting a modest Eu1.1bn of demand – bankers said conditions today appeared more stable.

After widening further yesterday, Bunds were seen as having tightened by 1bp-2bp across the curve this morning, with swaps moving in line with that shift. One syndicate official noted that the Bund future had moved from 155.40 at the close yesterday (Monday) to 155.85 today.

“The question is whether this will last,” he said. “Is this a dead cat bounce or the end of the trend? Either way, this is still significantly lower than what we had just two or three trading days ago.”

Despite the more stable backdrop, bankers said it was unlikely than an issuer would test the euro market with a new deal with week.

“We all need to be patient, this is not the market in which things will happen quickly,” said one syndicate official.

He suggested that a generously priced trade could work.

“This market could sustain a trade, but first we just need someone to bring one,” he said.

Another banker agreed, saying that issuers are unlikely to be in a hurry, even though some are leaving blackout periods, and despite the market being technically in good shape with a high level of redemptions and support from CBPP3.

“I wouldn’t expect anyone to come to the market just yet,” he said, “but if they did, I would roll out the red carpet.”

Another banker noted that the UK general election on Thursday would also likely cause issuers to be cautious.

“I think issuers would rather wait for more stability,” he said, “or do what Swedbank has done and look at other currencies.”