SEB is set to issue a seven year euro benchmark covered bond tomorrow (Tuesday), having announced a mandate today, and bankers expect more supply to follow, with this week deemed a better window than last after political risks have been cleared.

The deal will be SEB’s first euro benchmark since February 2016, when it sold a Eu1.5bn five year.

SEB announced this afternoon that it has mandated BayernLB, Commerzbank, Crédit Agricole, SEB and UBS as bookrunners for the trade, to be launched in the near future. A syndicate banker at one of the leads said the deal will be launched tomorrow, subject to market conditions.

Bankers said fair value for the new issue would be around 6bp-5bp through mid-swaps, seeing SEB June 2022s trading today at minus 10bp, mid, and January 2023s at minus 9bp. They also cited SBAB June 2022s at minus 10bp and February 2024s at minus 5bp, Stadshypotek June 2022s at minus 10bp and February 2024s at minus 6bp, and Swedbank July 2022s at minus 11bp and May 2024s at minus 5bp.

The covered bond market has got off to a slow start this month, with only one euro benchmark sold so far, a Eu500m green Pfandbrief for Berlin Hyp on Wednesday. This slowdown in supply came on the back of a week interrupted by public holidays, an ECB meeting and the UK general election. Bankers are confident that more deals will emerge this week, alongside SEB’s.

“It has been stone dead in the covered bond market today, with a Eu1bn BNG issue from the Netherlands the only euro activity to speak of anywhere,” said a syndicate banker. “But the window this week is clear, and the market feels if not great then at least good enough, with spreads stable.

“I would certainly expect there to be a few deals to come this week.”