ING-DiBa is set to launch a dual tranche, five and 15 year mortgage Pfandbrief tomorrow (Tuesday) in the first benchmark covered bond issuance since MMB SCF pulled a deal on Thursday, although a German public holiday on Wednesday could restrain further issuance.

The covered bond issuer of My Money Bank SCF decided against proceeding with its EUR500m no-grow seven year issue after failing to generate sufficient demand at 15bp over mid-swaps on Thursday, instead postponing its debut benchmark.

Although part of the deal’s difficulties were deemed idiosyncratic – unfamiliarity with a new and somewhat unusual, private equity-owned credit – a cut in the Eurosystem’s standard CBPP3 order from 30% of new issue sizes to 10%, first witnessed on a EUR500m 10 year DKB social public sector Pfandbrief on Tuesday, was said to have further undermined market conditions.

The reduction in the CBPP3 order for benchmark settling from today (1 October) onwards coincides with a halving from October in the ECB’s monthly target for its overall asset purchase programme, from EUR30bn to EUR15bn.

La Banque Postale and BNP Paribas Fortis were nevertheless able to successfully execute CBPP3-eligible benchmarks on Wednesday and Thursday, and today ING-DiBa mandated BNP Paribas, Deutsche, ING, NordLB, Swedbank and UniCredit for a dual tranche, five and 15 year mortgage Pfandbrief.

Although other issuers are said to be eyeing the market, syndicate bankers said supply could be relatively thin this week partly due to a public holiday in Germany on Wednesday. An increasing number of issuers are also entering blackouts over the coming weeks.

Euro benchmark covered bond supply in the third quarter stood at some EUR28bn, almost double the amount issued in the third quarter of 2017, according to Joost Beaumont, senior fixed income strategist at ABN Amro. This took year-to-date supply to EUR114bn, a 26% increase on the first nine months of 2017.

“Net supply is currently almost EUR47bn positive,” said Beaumont, “a sharp contrast to the negative net supply last year.”