DBS Bank and Cariparma are expected to lead a more active week in the covered bond market once German market participants return tomorrow (Tuesday) from a public holiday, after only one benchmark last week, although bankers said markets are still at the mercy of Deutsche Bank-related headlines.

No new issuance emerged this (Monday) morning, with Germany marking its Unity Day with a public holiday, but bankers expect higher supply this week after last week yielded just one euro-denominated benchmark – a Eu500m 10 year issue for Stadshypotek on Tuesday – amid challenging conditions for financials issuance.

DBS Bank is expected to sell a debut euro-denominated covered bond, having completed a European roadshow on 23 September. A syndicate official at one of leads DBS, Deutsche, JP Morgan, Société Générale and UniCredit said the Singaporean issuer was taking time to assess feedback from investors and monitoring market conditions.

Bankers away from the leads said it was not surprising that the deal did not emerge last week given the uncertainty in other markets.

“Speaking generally, Asian banks have been known to be among the more selective issuers when it comes to pricing,” said a syndicate banker away from DBS’s deal. “In times such as last week, when senior was taking a hit, it is understandable that they might choose to wait.

“Covered bonds were fine, as Stadshypotek showed, but maybe it wouldn’t have been the best time to get optimal pricing with a debut.”

Italy’s Cariparma is also expected to come to the market this week with an intermediate or long-dated euro benchmark after completing a roadshow today. Crédit Agricole has the mandate.

Last week’s difficulties in the financials space came as bank shares were down on the back of concerns over Deutsche Bank and the German banking sector, which prompted NordLB to pull a planned senior unsecured issue on Tuesday.

Bankers noted that Deutsche’s Pfandbriefe had widened marginally last week, while Commerzbank spreads were also under some pressure, but said both were today trading in line with Friday’s close – while covered bond spreads elsewhere had been unaffected.

Deutsche’s shares were up today, after reports emerged on Friday afternoon that the US authorities could be seeking a substantially lower fine from the German bank than had previously been reported, and market participants said this was an encouraging sign for issuance prospects in both covered bonds and senior this week.

“We’re still at the mercy of those headlines and Germany’s not in, so it’s hard to gauge actual covered bond sentiment today,” said a syndicate banker. “But that said, covereds have held up fine, and I don’t think there should be any problems.”

PKO Bank Hipoteczny and SNS Bank are also expected to launch deals later in the fourth quarter, with the Polish issuer set to make its euro debut following a roadshow that will commence on Thursday and the Dutch bank poised to return after four years out of the market.