The end looks near for covered bond issuance for the year, with the week expected to be quiet as issuers seek a surer footing after recent rates volatility, spread widening and muted new issues, although Coventry Building Society has mandated for a euro benchmark to be launched after a roadshow.

Markets were calmer this (Monday) morning, with rates mostly stable after more pronounced intraday moves last week. However, issuers are expected to wait for more sustained stability before entering the market, after a mixed bunch of six euro benchmark covered bonds issued last week met with disappointing demand.

Sp Mortgage Bank is the only issuer with an announced deal in the pipeline that could come this week, after having completed a European roadshow on Friday ahead of a debut euro benchmark covered bond.

“There still should be enough free cash left for that deal to be comfortably cleared,” said a banker away from the leads, “but in this market and bearing in mind last week’s trades, I’d be surprised if they or anyone else are able to score a bulls-eye.”

All of the new issues sold last week were trading wider than re-offer this morning, in line with the wider market, and with peripheral and longer dated issues in particular underperforming. A Eu1bn 10 year cédulas for BBVA was seen around 14bp wider and a Eu500m seven year for Caja Rural de Navarra 7bp wider.

Some bankers suggested that issuance across all markets will be frontloaded this week, with the US closed on Thursday for a Thanksgiving public holiday and providing an excuse for a break, but others said this was of little importance to the covered bond market.

Bankers agreed that next week could be the last full, productive week in the euro market, as the seasonal holiday period approaches and with a constitutional referendum in Italy on 4 December having the potential to exacerbate volatility.

A mandate was announced today for a Coventry Building Society Eu500m no-grow seven year deal to possibly follow a roadshow starting on Friday. Commerzbank, Danske, HSBC and Natixis have the mandate for the deal, which is expected to be rated triple-A by Moody’s and Fitch.

The UK issuer’s last benchmark covered bond was a £500m three year FRN in March 2015, and its last euro benchmark was a Eu500m seven year in October 2014.

Although issuance picked up last week after a muted start to November, with Eu5.25bn sold across the six benchmarks, expectations are low for the trading days that remain. Even if market conditions were to improve, issuers are already well funded and are generally cool on the idea of pre-funding for 2017, syndicate bankers said.

“Man, have we needed some bonds!” said one. “Excluding last week it has been so, so quiet recently, and I don’t see it getting much better.

“Speaking to issuers and my syndicate colleagues, I get the sense that not many issuers will be pre-funding this year. The cost of carrying cash is punitive, and no one needs the liquidity anyway. They would just be piling liquidity on top of liquidity – so why bother?”

Another banker agreed.

“If you’re looking for a reason not to move, you’ll definitely find one,” he said. “You can choose from rate volatility, widening spreads, investors gradually closing their books as the year-end approaches and the fact that issuers don’t need the money.

“This does not preclude anything, but it’s fair to believe we’ve seen the most of the season.”

Some Eu123.7bn of euro benchmark covered bonds have been issued so far in 2016, and supply is set to fall short of many analysts’ expectations. At the end of 2015, analysts cast 2016 estimates ranging from Eu125bn to Eu160bn, with the majority expecting between Eu145bn and Eu155bn.

Analysts suggested that supply will likely reach around Eu130bn by the year-end.

“This compares to Eu149bn in euro benchmark redemptions, i.e. the market is shrinking,” added analysts at Commerzbank.

Such supply would also mean that 2016 is the first year in which euro benchmark issuance volumes fell since 2013. Last year, some Eu144bn was issued.