Covered bond issuers from both core and peripheral jurisdictions will this week make the most of what is expected to be the last clear window for issuance ahead of potential volatility, according to bankers, with NordLB Lux expected tomorrow (Tuesday) and Westpac NZ later in the week.

After issuers sold six deals totalling Eu4bn last week bankers noted it was the busiest week in terms of euro benchmark covered bond supply since the week ending 17 April.

“May was slow, but the market was back with a bang last week, with four deals hitting screens all at once on Wednesday,” said a syndicate official, “and all went well, at least.”

Bankers noted that the new issues mostly offered only marginal new issue premiums, with bid-to-cover ratios of 1.4 to 2.7, and were trading 2bp-4bp tighter today. They expect market conditions to be similarly supportive this week, and highlighted that increased event risk later this month could mean that issuers launch deals in the coming days.

“This week looks like the last, best window,” said a syndicate official. “Things have gotten off to a quiet start today, but it’s going to be a busy, busy week.”

Bankers cited an FOMC policy meeting next Wednesday (15 June) as having the potential to increase volatility – although a summer rate hike is now deemed less likely after a weak non-farm payroll figure on Friday – before the market is expected to close in the run-up to a UK referendum on EU membership on 23 June and a Spanish general election on 26 June.

“This week is clean, but from next week it is going to get much more difficult to pick a window,” said another syndicate official. “It is not quite now or never, but it might be now, or not for some time.”

Bankers said that both core and peripheral covered bond issuers are monitoring the market with a view to selling euro-benchmarks this week, noting that deals last week for Italy’s Banca Popolare di Milano and Spain’s Banco Sabadell attracted strong demand and were priced well inside initial price thoughts.

“The peripherals were particularly impressive last week, making an encouraging return after those countries had stayed relatively quiet,” said one. “I’d be surprised if there are no piggyback trades this week.”

NordLB Luxembourg Covered Bond Bank today (Monday) announced a mandate for a potential Eu500m no-grow seven year lettres de gage publiques issue. The deal is expected tomorrow, according to a syndicate official at one of leads Commerzbank, Deutsche, HSBC, NordLB and UBS.

NordLB Luxembourg sold an inaugural, Eu500m five year issue in March 2015 after a realignment of the role of the issuer within the NordLB group, before selling its second deal, a Eu500m three year, in October.

Syndicate officials at the leads quoted NordLB Luxembourg’s November 2018s at 12bp, mid, and March 2020s at 11bp. They also saw NordLB’s December 2019 Pfandbriefe at minus 8bp.

Westpac NZ will later this week launch a five year euro-denominated benchmark covered bond after the conclusion of a European roadshow tomorrow (Tuesday), according to a syndicate official at one of leads JP Morgan, UBS and Westpac.

The deal will be only the second benchmark New Zealand covered bond this year, following a Eu500m five year issue for ASB Finance on 5 April. The deal was priced at 29bp, and today seen trading at 22bp, bid.

A syndicate official away from the mandate noted that the last non-Eurozone benchmark issue, a Eu750m long five year for SR-Boligkredit on Wednesday, performed well, attracting Eu2bn of orders from almost 100 accounts.

“That bodes well,” he said. “There is clearly a supportive bid for those jurisdictions.”

Fellow New Zealand issuer BNZ International Funding will also commence a European roadshow today, ahead of a potential euro-denominated benchmark issue. However, BNZ’s roadshow will conclude on Thursday, and bankers suggested the deal will likely not emerge until next week.

BNZ’s last euro benchmark covered bond came in 2012, when the NAB subsidiary sold a Eu500m May 2015 issue.