Covered bond supply will be limited next week in spite of supportive conditions and encouraging results for VakifBank and CFF, according to bankers, due to blackouts, holidays and a focus on higher beta markets, although the Mortgage Society of Finland is set for a sub-benchmark debut.

Year-to-date euro benchmark issuance has passed Eu78bn, making it the busiest first four months of the year since 2011, with April supply of over some Eu18bn a major contributor to the above-average pace of supply.

However, supply tailed off sharply from the middle of this month, with only four euro benchmarks launched in the past fortnight – Eu1.5bn in each of the last two weeks comprising two deals apiece. Issuance this week was limited to a Eu1bn long eight year for Compagnie de Financement Foncier (CFF) on Monday and a Eu500m five year Turkish debut from VakifBank on Tuesday.

“We haven’t had much, but the deals that did come went very well,” said a syndicate official “CFF came impressively tight to secondaries, and VakifBank was something of a blowout.”

CFF’s deal was priced at 9bp over mid-swaps, with the issuers’ May 2024s seen at 8bp, bid, pre-announcement.

VakifBank, meanwhile, attracted Eu3.2bn of orders from almost 300 accounts for the first Turkish benchmark covered bond.

“I can’t remember seeing that many investors in a book for a long time,” said a syndicate official away from the leads.

Bankers said supply was modest this week because many issuers had been active earlier in the year or were in reporting periods, with some issuers also focussing on the subordinated and senior markets while conditions are supportive.

“The market is fine, issuance conditions look good, and this slowdown in supply will only be helping,” said one. “It is just that this is a slow time of year, many issuers have had their fill or are in blackout, and the pipeline looks thin.

“It is too early to start thinking about the summer, never mind the summer holiday, but the market does feel somewhat empty.”

Bankers added that with the UK having a public holiday on Monday and other jurisdictions, including Germany, also out of the office on Thursday, supply is likely to remain light next week.

“I would expect it to be a long weekend for all of us, with no deals until Tuesday at the earliest,” said a syndicate official. “But if anyone feels like doing something, the market is there and it will probably be quite clear.”

The Mortgage Society of Finland is expected to launch a debut Eu250m issue next week, after having completed a European roadshow last week. Danske, Nordea, LBBW and Swedbank have the mandate.