The euro covered bond market today (Tuesday) picked up where it had left off last week, with Bankia, LBBW and Bank of Montreal each printing well oversubscribed deals that bankers said demonstrated the strength of the market after a hesitant start on Monday.

Today’s supply follows an unexpectedly quiet day in the covered bond market yesterday (Monday), with no deals launched after a weak reopening of the broader market on the back of a sell off in Chinese stock markets.

While noting that the volatility in China persisted, bankers said broader sentiment was this morning stronger, and cited the outcome of today’s new euro issues as evidence of prevailing supportive conditions in the covered bond market.

“We’ve seen a lot of issuance in euros, with strong order books across the board and each transaction going well,” said a syndicate official away from the deals.

“Despite the weaker reopening yesterday, covered bonds remain well bid. It’s more of the same.”

Bankia was able to sell its Eu1.25bn seven year issue at the tight end of guidance, printing the deal at 45bp over mid-swaps with books approaching Eu2bn.

Leads Bankia, Barclays, Commerzbank, HSBC and Société Générale launched the deal with initial price thoughts of the low 50s area, moving to guidance of 47bp plus or minus 2bp on the back of books of Eu1.7bn.

The new issue is the third from a Spanish issuer this month, following a Eu1.25bn five year issue from Banco Popular Español sold on Tuesday of last week at 37bp and a Eu1bn seven year from Bankinter, which was priced at 22bp on Thursday.

Syndicate officials away from the deal noted that Bankia’s new issue came substantially wider than these recent Spanish deals, but said the spread was appropriate, reflecting the difference in credits, and was a good result for Bankia.

“Bankia is obviously one of the wider names in Spain but they started off cautiously, which was the right approach, it it’s worked well for them,” said one.

Another syndicate official away from the leads said that such a result, from a more challenging name, was a good sign for the market.

“This deal is a very strong statement from the market that there’s plenty of demand for Spanish paper at present,” he added, “while the deal going well with a seven year tenor demonstrates increasing confidence among investors about taking on a bit more risk.”

The deal is only the Spanish issuer’s second benchmark covered bond since February 2012, following a Eu1bn ten year sold in March.

LBBW’s new issue comes two weeks after its last deal – a Eu750m five year mortgage Pfandbrief on 14 July that, as the first true benchmark deal in four weeks, led the reopening of the euro covered bond market after a positive outcome had emerged from Greek negotiations.

Leads ABN Amro, LBBW, Société Générale and UBS priced the Eu500m no-grow public sector Pfandbrief at 16bp through mid-swaps, after launching the deal with initial price thoughts of minus 12bp.

A syndicate official away from the leads noted that the new seven year issue was priced tighter than LBBW’s five year issue, which was priced at minus 15bp.

“Yes this is public sector backed as opposed to mortgage backed,” he said, “but that is a strong result.”

Meanwhile Bank of Montreal leads Bank of Montreal, Barclays, Deutsche and HSBC launched the Eu1.5bn five year issue with initial price thoughts of the 10bp area, before moving to guidance of the 8bp area. The re-offer was then set at 7bp, with books approaching Eu1.9bn at the last update.

A syndicate official away from the leads said the price was almost exactly equivalent to dollar Libor plus 47bp – the level at which the last five year dollar transaction from a Canadian bank was printed, by CIBC on 15 July.

He noted the price was also in line with that of the last euro benchmark from a Canadian issuer – a Eu1.25bn five year deal from Bank of Nova Scotia printed at 7bp on 16 July.

Following up its recent euro trade, Bank of Nova Scotia was in the sterling market today to print a sterling three year FRN, with leads Deutsche, Scotiabank and UBS launching with initial price thoughts of the three month Libor plus 28bp area.

Syndicate officials away from the deal said the execution appeared to be progressing slowly.

“You would expect a sterling transaction to go a little slower than these euro trades,” said one, “but you feel it has been slower than they might have hoped.”

Syndicate officials meanwhile said they expect primary market activity to slow as the end of the month approaches, with deals being frontloaded at the start of the week.

“That being said, towards the back end of the week there are more European names emerging from blackout periods,” said one, “so there’s a chance some of those may elect to take their chances at the end of the week rather than wait.”

Another syndicate official agreed.

“It does feel like it’s going to get quieter for the rest of the week, but I’m not sure this is the last hurrah before the summer just yet.”