Issuers may frontload supply next week ahead of a Thursday ECB meeting to avoid potential disappointment, with investors also expected to be keen to pre-empt any new policy measures, according to bankers, who also drew encouragement from a Bankia deal yesterday, in spite of modest demand for a BNS issue.

Syndicate officials said issuers that are currently mulling deals will likely look to tap the market early next week, ahead of a European Central Bank meeting after which president Mario Drago is expected to announce additional quantitative easing and/or a cut to the ECB’s deposit rate, if the announcement of US non-farm payrolls this afternoon does not negatively affect market sentiment.

“The non-farm payrolls are unlikely to have any impact, but that is the first hurdle,” said a syndicate official. “If we clear that, then I’d expect a good start to next week.

“I don’t see why people would wait until after the ECB, because you never know what’s going to happen. If there’s a good window and you can do your deal, I think you’re better to get it done.”

Another banker agreed.

“We could be set up for disappointment, which is probably why we’re seeing a decent number of issuers jumping in to the market before the ECB,” he said.

They added that some investors will also be keen to buy ahead of the meeting, in the expectation that any new measures announced by the ECB will pull yields lower.

“Already five years swaps are at minus 2bp and there’s only one way to head – down,” said one. “That will probably be a stimulating factor for cash buyers to get involved in deals now, rather than wait.

“There might be an element of that spurring the amount of demand we’re seeing in order books.”

Eight euro benchmark issues totalling Eu6bn were sold this week. Bankers said a three times oversubscribed Eu500m six year Pandbrieven for Belfius, with a new issue premium put at 1bp, and a Eu500m five year debut for Singapore’s UOB, each on Wednesday, were the highlights.

“We’ve had a few varied issues and it’s all gone very well,” said a syndicate official. “The only one where there’s a couple of question marks is BNS.”

Bank of Nova Scotia leads BNP Paribas, Deutsche, HSBC, Scotiabank and UBS yesterday priced the Canadian bank’s seven year deal at 27bp over mid-swaps, from initial guidance of the high 20s area, eventually fixing the size of the deal at Eu750m on the back of a book over Eu800m.

Syndicate officials suggested the result was modest, with the deal being the first euro benchmark covered bond for a Canadian issuer sized smaller than Eu1bn.

“Eu1bn would have been nice, but you take what is available in the market,” said a syndicate official at one of the leads. “It’s hard to say why there was not more demand.

“Everyone who you would expect to be in the order book was in the order book, so it just seems as though people made smaller bids than usual.”

Syndicate officials said that the starting price appeared aggressive when compared with an RBC five year issue that was launched with guidance of the 26bp area only last Friday, but said BNS’s final spread of 27bp offered a 5bp premium, which is in line with recent supply.

“I don’t think there’s anything they could have done differently,” said one.

Bankers away from the leads suggested investors were getting full on Canadian paper, noting that, before the BNS issue, four Canadian euro benchmarks had hit the market this year, comprising Eu5.5bn of supply, including a Eu1.5bn three for BNS on 12 January.

“I think they just came back to the market too soon, while there has also been a heck of a lot Canadian supply already this year, with each of them taking a good size out of the market,” said one. “It was the first Canadian benchmark sub-billion, so there is understandably a bit of press around it, but it wasn’t a bad deal.”

The lead syndicate official added that not much could be interpreted from the deal.

“The market is strong and investors are there with cash to put to work,” he said. “It is just sometimes you get a certain name in a certain part of the curve that doesn’t look quite as good as what came before.

“But the deal worked well, it is not a question of that.”

Syndicate officials said that Bankia’s Eu1bn seven year cédulas showed that the market was in good shape, describing the price in particular as a success. They saw the new issue as offering a premium of 10bp-14bp, which they noted was substantially less than the 20bp paid by the last peripheral issue, a Eu1.5bn seven year for Banco Popular Español on Thursday of last week.

“That suggests there’s a good amount of risk appetite around,” said a syndicate official away from the leads. “That’s clearly encouraging.”

Bankia leads Bankia, Barclays, BAML, Credit Suisse and Natixis yesterday priced the cédulas hipotecarias at 82bp over mid-swaps, down from initial guidance of the 90bp area, with the book closing at over Eu2.4bn. A syndicate official at one of the leads said the deal was trading 3bp-4bp inside re-offer today.

The lead syndicate official said the deal was supported by being priced flat to the Spanish sovereign, but said an upgrade of Bankia’s cédulas hipotecarias by Fitch last Friday, from A- to A, had no impact on the outcome.

“All in all it was a very good transaction, with a solid, diverse order book,” he added. “Hopefully it bodes a positive market for some of the other peripherals to follow in Bankia’s footsteps.”

Fund managers were allocated 47% of the deal, central banks and official institutions 26%, banks 13%, insurance companies and pension funds 8%, private banks 3%, and others 3%. Accounts from Germany and Austria bought 27%, Spain 26%, the UK 16%, Italy 7%, the Nordics 4%, Switzerland 3%, France 2%, Portugal 1%, the Middle East and Asia 1%, and others 5%.