A German issuer and at least one Australian will lead a busier week in the covered bond market this week, according to bankers, with a benchmark issue expected as soon as tomorrow (Tuesday), while others could follow in a clear, post-holiday window amid favourable conditions.

Bankers said three to five issuers are likely to launch benchmark covered bonds this week, with a German issuer considered a favourite to issue in euros, and at least one Australian issuer also expected, as previously reported.

“Those two jurisdictions are clearly the leading candidates this week,” said a syndicate official. “They are top of my list.”

Bankers said the German issuer is likely to opt for a medium maturity, with the deal potentially emerging tomorrow.

The last benchmark German Pfandbrief was a long five year for LBBW that was priced at 4bp through mid-swaps last Tuesday, and was today seen trading at around minus 5bp, bid.

German supply in April had otherwise been limited, with only MünchenerHyp, Deutsche Pfandbriefbank and HSH Nordbank selling benchmarks.

Syndicate officials said the Australian issuers may issue in either the covered bond or subordinated markets, and are also considering issuing in euros or US dollars. Most leading Australian issuers exited blackout periods last week.

“In general I think supply this week will most likely come from the core and semi-core countries,” added a syndicate official. “Some peripherals are monitoring the market, but with peripheral govvies suffering, the spread versus govvies is very large, and I’m not sure investors would be willing to buy at those levels.”

LBBW’s new issue attracted over Eu2bn of orders, while a Eu1.25bn seven year issue for OP Mortgage Bank – the only other benchmark covered bond last week – attracted some Eu3bn, also on Tuesday.

Bankers saw the deals as offering little to no new issue premium versus the bid side of the issuers’ curves, and said they had benefitted from high investor demand while supply was limited, amid a week interrupted by public holidays across Europe.

“Last week was slow, but very successful,” added a banker. “I don’t see any reason why results would not be as good this week.”

No euro benchmarks were launched today in the financial institutions or SSA markets, but bankers said that overall market conditions are supportive, with European equities up and credit indices tighter this morning.

“We had a few weaker sessions last week, albeit while a lot of people were on holidays, with volatility more exaggerated on the back of lower trading volumes,” said a syndicate official. “From an overall market standpoint, there are no complaints.”

Another banker agreed, adding that there is a clear window for issuance this week ahead of public holidays next week.

“The market is bullish,” he said. “It is not a question of if a deal is brought forward, it is just a question of when, who, and how.”