WL Bank is set to issue a Eu500m 10 year Pfandbrief tomorrow (Tuesday) in the third long-dated German benchmark since Wednesday. Bankers said more euro issues could emerge this week, ahead of potential volatility in the coming months and a much-discussed speech from Mario Draghi on Friday.

Westfälische Landschaft Bodenkreditbank (WL Bank) announced this (Monday) afternoon that it has mandated DZ Bank, Erste, Helaba, Natixis and NordLB to lead manage the Eu500m no-grow mortgage-backed issue. A syndicate banker at one of the leads said the deal will be launched tomorrow, subject to market conditions.

The new issue will be WL Bank’s second benchmark Pfandbrief this year, following a Eu500m seven year issue in February. It also tapped a Eu500m April 2027 Pfandbrief by Eu250m in April. Syndicate bankers at the leads saw WL Bank February 2026s trading at minus 16.5bp mid, pre-announcement, August 2026s at minus 17bp, and April 2027s at minus 13bp.

The deal comes after MünchenerHyp reopened the euro covered bond market last Wednesday with a Eu750m long October 2026 Pfandbrief that was the first euro benchmark in over a month. Commerzbank followed the next day with a Eu750m 10 year.

Both attracted over Eu1bn of orders, 85% of which came from domestic accounts in MünchenerHyp’s deal and 73% for Commerzbank’s, and bankers said this bodes well for further long-dated German supply.

The deals were seen trading this morning at minus 14bp, mid, and minus 12bp, respectively – both 1bp inside re-offer. Bankers noted that some there had been some softness in other markets on Friday on the back of terrorist attacks in Spain and other headlines, but said this had not fed through into covered bond spreads.

After a stable start this morning, bankers said the week offers a good opportunity for more covered bond issuers to access the euro market ahead of potential crowding after the end of the holiday period proper and while issuance conditions remain benign.

They noted that covered bond spreads could widen in the coming months on the back of an ECB meeting on 7 September, at which the central bank is expected to announce QE tapering, and other geopolitical risks.

“There is a lot of potential volatility in the coming months, so there is a good argument for issuers using the back-end of what is traditionally the summer break period for covered bond issuance,” said one. “I would therefore expect to see between one and three euro covereds by the end of the week.”

Another syndicate banker said issuers are monitoring the market, but suggested that most are likely to wait until next week to announce new issues.

“I think there could be tentative supply, but I would not expect the market to restart in earnest until next week, as many investors are still not back at their desks,” he said.

The annual central banking summit at Jackson Hole will commence on Thursday, with ECB president Mario Draghi to speak on Friday. News reports and some analysts have suggested that Draghi will not use his speech to provide further details on how the ECB will exit from its asset purchase programme, but market participants are nonetheless expected to be following the event closely for any hints on ECB policy.

“Regardless of what you expect from Draghi, it is something to think about and it provides an extra incentive for any early movers to get their deals done by Thursday,” said a syndicate banker.