A placid week is foreseen in the covered bond market as the summer slowdown sets in, despite recent new issues being encouraging, as many jurisdictions are entering blackouts and the pipeline is all but cleared. Any ECB pronouncements on Thursday are meanwhile expected to be becalming.

Just one euro benchmark covered bond was sold last week, a Eu500m three year Pfandbrief for HSH Nordbank on Tuesday, making it one of the quietest weeks in the euro primary market year-to-date. Canadian Imperial Bank of Commerce and Bank of Montreal tapped the sterling market, with a £525m five year fixed rate issue and a £800m three year FRN, respectively.

“I think this week could be just as quiet, or even quieter,” said a syndicate banker. “Summer is here, the pipeline is almost empty, and we are well into the reporting season.”

Only one public euro covered bond remains in the pipeline, a sub-benchmark debut for Andbank. The Andorran bank held a roadshow with lead JP Morgan at the start of July.

Starting this week, issuers from countries including Germany, France, Italy and the UK will enter blackout periods, joining the likes of Spain and Portugal, where banks entered reporting periods last week.

“There are a few markets that remain in the game, such as the Netherlands or Canada – which saw some activity last week,” said another syndicate banker. “But I don’t think many issuers will be rushing to come forward.

“We have seen that the demand is there, but I think most issuers are happy to wait.”

The ECB’s governing council will meet on Thursday, as expectations grow that the central bank will from next year begin winding down its asset purchase programme, following a change to its forward guidance at the last meeting and a relatively hawkish speech from president Mario Draghi in Sintra on 27 June. However, it is widely expected that the ECB will hold fire this week and rather wait to announce a tapering of its purchase programmes, including CBPP3, until the governing council’s September meeting.

Economists at UBS said that as markets reacted “very sensitively” to Draghi’s Sintra speech – which prompted volatility and a sustained rise in rates – they expect the ECB to communicate very carefully this week.

“Specifically, we expect the ECB to stress the good data even more clearly than before; to weaken its QE easing bias somewhat; and to indicate that a reassessment of its policy stance is due in early September, based on new macro forecasts,” they said.

“However, in order to not upset the markets, Mr Draghi is likely to assure the markets that the ECB will move slowly towards normalisation and continue, for the foreseeable future, to offer a substantial degree of policy accommodation.”