Bank of Queensland is expected to launch its first benchmark covered bond at the end of June, having announced a roadshow today (Friday) to introduce its new CPT programme. After limited supply, bankers expect business to resume as usual next week despite political uncertainties.

Bank of Queensland first flagged its intention to join the covered bond market last year, holding a roadshow in September to discuss the structure of a potential programme, before announcing that it would adopt a conditional pass-through (CPT) structure for its future issuance, becoming the first Australian issuer to do so.

The regional bank announced this morning that it has mandated BNP Paribas, Commerzbank, ING, National Australia Bank and UBS to arrange a European roadshow to introduce its newly established programme ahead of a potential euro benchmark issue with an intermediate maturity. The roadshow will commence on 19 June and conclude on 23 June.

Fitch assigned Bank of Queensland a AAA covered bond rating on 11 May, assuming a Eu500m five year issuance.

Only one benchmark covered bond was brought to market this week, a Eu500m short six year green Pfandbrief for Berlin Hyp, as the week was shortened by public holidays on Monday and the UK general election and an ECB meeting yesterday (Thursday).

The surprise result of the vote, with the Conservatives losing their majority, caused some volatility this morning, but markets recovered after Theresa May announced a coalition with a small Northern Irish party, and covered bond spreads were unmoved. The decision of the ECB to make its forward guidance on interest rates less dovish and the resolution of Banco Popular on Wednesday also had little wider impact and bankers expect the market to continue business as usual next week.

“I think those in the market are as annoyed as everyone else is by this constant political uncertainty, but we have gotten used to it,” said a syndicate banker. “This week we had the UK election and Theresa May subsequently putting together a weak coalition going into Brexit, Comey vs. Trump, Saudi Arabia vs. Qatar, and the ECB – but the market itself doesn’t seem to care too much.

“Despite all these stories, the covered bond market looks technically good. You shouldn’t feel 100% safe – there are some signs of a slowdown with people being more cautious and we have seen some secondary trades with investors trying to take profit – but the market will carry on.”