Euro covered bond issuance is expected to remain lively next week, with the pipeline already well-filled and issuers monitoring the market able to take heart from recent trades, after supply this week was its highest since early January, banishing thoughts of recent fallow months.

Some Eu5.25bn of euro benchmark covered bonds were issued across five trades this week, making it the busiest week since the second week of January, when Eu5.75bn was issued.

With Eu7.5bn of benchmark supply sold so far this month, supply has already exceed that of last May, when Eu5.25bn was issued across the whole month.

The upturn has provided succour to an undersupplied market, with euro issuance falling short of expectations in February, March, and April. The lack of supply was attributed to higher than expected take-up of the ECB’s TLTROs, blackout periods, and issuers’ focus being on other, higher beta markets.

However, with political risks largely cleared after the French election, banks exiting blackout periods, and demand in intermediate maturities and out to long end of the curve – in maturities out of reach of the funding offered by the TLTROs – many issuers have seen the benefits of returning to the market.

“Conditions are very tempting,” said a syndicate banker. “As long as you get the right starting point in terms of price, you can quite comfortably get a two or three times subscribed book with little premium at spreads that are getting tighter all the time.

“There is no hint of weakness yet, so why wouldn’t you?”

Bankers noted that most of this week’s deals had tightened on the secondary market, some, as with Compagnie de Financement Foncier’s Eu1.5bn long five year OF, priced at 5bp on Tuesday, by as much as 5bp.

The pace is expected to be maintained in the coming weeks, with Rabobank and Banco Comercial Português both on the road next week ahead of potential euro benchmarks, Hypo Tirol currently marketing a Eu250m issue, and Bank of Queensland expected to announce its debut soon, having established a new CPT programme this week.

Bankers are confident that further deals will be announced next week, with issuers from a variety of jurisdictions said to be monitoring the market.

“Given the noises I am hearing from my colleagues elsewhere, I think next week will be just as lively,” said a syndicate banker. “What a difference a month makes.”