Hypo Noe had the euro covered bond market to itself today (Friday) for a sub-benchmark five year deal, but after Eu8.25bn of supply this week benchmark issuance is expected to pick up again early next week, with BPM and UniCredit having mandated and a few others expected to join them.

Ten benchmarks hit the market this week, four on each of Tuesday and Wednesday, with one apiece on Monday and Thursday, as the market built on last week’s post-summer reopening. But despite activity slowing in the latter part of the week most syndicate officials said that the execution and performance of deals suggested nothing untoward had arisen from the heavy issuance.

“Yes, we have had a lot of supply, but we have not seen any problems,” said one. “Maybe some market participants took their foot off the pedal with the ECB yesterday and non-farms today, and deals coming later in the week were not encountering such large oversubscription – but that is a normal pattern.

“We haven’t really seen deals struggle unless there have been specific issues with pricing. And despite all the issuance covered bonds have been holding in well – just Santander is a basis point or so wider.”

Other syndicate officials were also positive.

“The liquidity to be put to work is enormous,” said one. “I would have expected some signs of fatigue early in the week, but it was only really yesterday that they perhaps emerged.

“So it is a case of ‘so far, so good’. I think it will continue like this next week until everyone flies off to Barcelona on Wednesday.”

Syndicate officials anticipate issuance on Monday and Tuesday ahead of industry events in Barcelona on Wednesday and Thursday, and two Italian issuers that announced mandates today are expected among this.

Banco Popolare di Milano has been roadshowing a new covered bond programme and has mandated a seven year to Banca Akros, Barclays, Mediobanca, SG and UBS, while UniCredit is planning a Eu500m five year FRN off its conditional pass-through programme via Crédit Agricole, Credit Suisse, HSBC, UBS and UniCredit.

Austria’s Hypo Noe was the only issuer in the euro covered bond market with a public issue this morning, with a Eu300m five year via ABN Amro, BNP Paribas, JP Morgan and LBBW. The leads went out with initial price thoughts of 15bp-17bp and then priced the issue at 15bp over.