Issuers are eyeing the euro market this week on the back of supportive conditions, according to bankers, but they said issuance could be interrupted by another weakening of sentiment and tempered by blackout periods. Kookmin is meanwhile taking IOIs for a five year dollar issue.

Crédit Agricole made use of a period of stability on Thursday to sell the first benchmark covered bond since Wednesday of the previous week. Then after markets reacted positively to ECB comments on Thursday afternoon, BNP Paribas and CFF (see separate article) followed on Friday, and syndicate officials are optimistic about the prospects of more issuance this week.

They said market conditions still look supportive for new issuance today after Asian equities closed up 1%, despite European equities having fallen 0.5% this morning on the back of a renewed fall in oil prices. However, no euro benchmark deals were live this morning and no mandates had been announced.

“Markets are reasonable, at least relative to what we’ve had for the rest of the year so far,” said one syndicate official. “We are on a good footing after Friday, and it’s kind of surprising that we don’t have any euro deals on screens.”

Another syndicate official said, however, that conditions were not so convincing.

“Yes, the market is OK-ish, but then it is not the kind of ultra-bullish environment that demands a Monday execution,” he said. “If things stay like this though, we should see some action.”

Some syndicate officials said several issuers are monitoring the market, with one syndicate official suggesting that as many as 10 are mulling new issues, but they added it is not clear how many will enter the market this week.

Another syndicate official said he believes supply will be limited, given the potential for an FOMC meeting on Wednesday to interrupt the window for issuance.

“With the FOMC on Wednesday and more economic data points on Thursday and Friday, you would have thought issuance would be front-loaded into the start of this week,” he said. “That no deals have been announced yet implies that issuers are happy to wait and that there isn’t much of a pipeline for the rest of the month.

“I think this quiet is a function of how many issuers have already done euro covereds, and also how many are being affected by some form of blackout period, which will naturally temper supply this week.”

Other syndicate officials agreed that blackout periods will limit supply this week. They said that some issuers from the UK, the Nordics, Germany and France could still tap the market this week, and noted that some Iberian issuers would be exiting blackouts at the end of the week.

While citing Wednesday’s FOMC meeting as having the potential to negatively affect market sentiment, syndicate officials also suggested that some issuers might wait for a more prolonged period of stability.

“The reaction to the ECB was positive, but things haven’t fully stabilised, and it feels like some issuers might be concerned that things might drift,” said one. “It is difficult to call which way things are going to go.

“However, for now the market is open if you are prudent and pay the right premium.”

Syndicate officials said that the new issue premiums offered by recent supply were higher than had been observed at the start of the year, and suggested they could remain elevated in the coming weeks until market sentiment improves further. However, they noted that Friday’s new issue from BNP Paribas was deemed as paying a more limited concession.

“Earlier this month we were looking at premiums of 3bp-4bp for most core names, whereas now you probably have to pay closer to 5bp-7bp,” said one. “However, if you look at BNP Paribas, it shows that if you limit the size you can get a tighter print.

“It isn’t clear cut with regards to premiums and it depends on the name and size of the deal.”

South Korea’s Kookmin Bank is today taking IOIs and has requested feedback for an expected US dollar-denominated five year 144A covered bond. Leads ANZ, BNP Paribas, Commerzbank and DBS announced that they have received several IOIs from official institutions, bank treasuries and global asset managers.

“The process is underway,” said a syndicate official at one of the leads, “but there is no clear time yet when the deal will be done.”

The Korean issuer announced a mandate for the deal earlier this month, and held investor meetings in Singapore and Hong Kong on 11-12 January.