Further covered bond supply is expected next week after conditions proved resilient and investors receptive in spite of negative headlines this week and the approaching year-end, but bankers said deals are likely to be concentrated into a narrow window before an ECB meeting.

Some Eu3.25bn of covered bond supply hit the market, from a Eu250m three year Pfandbrief for SEB AG to a Eu750m 10 year from Banca Popolare di Milano, and syndicate officials said market sentiment had remained in good shape through the week.

They noted that issuance across the capital structure had continued to be well absorbed in spite of fallout from the shooting down of a Russian military plane by Turkey on Tuesday, which was followed by a 1%-1.5% sell-off in European equity markets and a 7bp widening of the iTraxx Crossover. Some syndicate officials said they were also surprised by the overall amount of primary market activity with the year-end approaching and given Thanksgiving in the US this week.

“The market more or less brushed off what could have been challenging geopolitical risk in the middle of the week, and easily navigated some other headlines,” said a syndicate official. “Overall things felt good across each of the markets.”

Syndicate officials noted that oversubscription levels in new covered bond issues were down from previous weeks, with the week’s four benchmark deals 110%-130% oversubscribed, and that CM-CIC’s issue had widened by 1bp-2bp yesterday and the week’s other longer dated deal, a Eu750m 10 year for Banca Popolare di Milano, by 3bp-4bp.

They said, however, that demand remained relatively strong.

“For the time of year, we’ve seen healthy supply and very healthy levels of demand,” said one.

Another syndicate official said the declining book sizes are not a sign of market weakness, highlighting that a debut, Eu750m five year conditional pass-through issue from Aegon Bank attracted almost Eu1bn of orders on Tuesday.

“I think it reflects more that issuers this week have been more ambitious in what they’ve tried to do, either with more difficult maturities or with the pricing,” he said. “Aegon’s debut shows that slightly more esoteric deals can still be done well, while the other results were still respectable, and I think that’s a good sign going into next week.”

Syndicate officials said they expect market conditions to remain supportive for new issuance, but questioned whether supply will continue in current volumes next week, with many issuers now done for the year.

“From an investor point of view, you can see that demand is still there for the majority of transactions, as everything from covered bonds to AT1s have been well received this week,” said one. “The question is more whether issuers still have funding to do.”

Another syndicate official agreed.

“There will be a few latecomers,” he said, “but it feels like we are approaching the end of the game.”

Syndicate officials said that whatever supply arrives is likely to be concentrated into Tuesday and Wednesday, however, in between the end of this month on Monday and an ECB meeting on Thursday, at which an announcement is expected on an expansion of the central bank’s asset purchase programme (APP).

“I think we will see a last hurrah before the ECB next week as issuers take a run at those two days,” he said. “Given the potential that the ECB could disappoint, I wouldn’t expect anyone who still has a deal to do to be eyeing the week after.”