The euro covered bond market is set to reopen next week after a quiet month and it could be a strong start, say bankers, as a diverse group of core issuers are monitoring the market, including German names, despite the distraction of expected senior preferred supply.

No euro benchmark covered bonds have been launched since 18 July, when Banco BPM sold a EUR500m long five year OBG, and other FIG markets have also remained quiet through the summer period.

However, syndicate bankers are confident the market will reopen next week, with multiple issuers from a range of core jurisdictions monitoring the market.

“I think covered bond supply will pick up pretty rapidly next week,” said a syndicate banker. “We are aware of at least four potential trades on the covered bond side, so it will be a good start – a low beta start, but still an active start.”

Other syndicate bankers agreed that a number of issuers could come to the market next week, although supply is expected to be heavier still in the last week of August or in the first weeks of September.

The candidates for issuance next week include German names, said bankers, even though many German banks are expected to focus on senior preferred issuance in the coming months, with legislative changes effective as of 21 July having opened up the senior preferred market.

Indeed, Berlin Hyp announced a mandate today for an inaugural EUR300m senior preferred transaction that could be launched as soon as Monday.

“It is true that senior preferred distraction could mean less Pfandbrief issuance in the coming days and weeks,” said a syndicate banker, “but there are still plenty of candidates and plenty of time to tap both markets.”