MünchenerHyp and SMBC are expected to launch inaugural green and Japanese benchmarks, respectively, tomorrow (Tuesday), with market conditions proving encouraging today, and ahead of public holidays across much of Europe on Thursday.

Syndicate bankers said markets were in slightly better shape today, with equity markets up and credit indices tightening. S&P’s decision not to downgrade Italy on Friday, but only to put it on negative outlook, was cited as a positive, with relief at the move helping government bond markets to be “better behaved” today, in the words of one.

“We might see some activity tomorrow,” he said. “There is nothing in FIG today as people wanted a view on how the week wold start, but both MünchenerHyp and SMBC have completed their roadshows and are in the starting blocks.”

Sumitomo Mitsui Banking Corporation (SMBC) teed up its planned debut on Friday, when its roadshow finished, by announcing that it could enter the market early this week. It reported pricing feedback from investors – it met more than 60 on the roadshow – coming in the context of mid-swaps plus the high teens to the low 20s for its five year euro benchmark.

A syndicate banker away from the leads said he would be particularly impressed were SMBC to come inside 20bp over. He said he expects the first Japanese covered bond to have to pay a premium over, for example, Singaporean covered bonds because SMBC’s issue is structured on a contractual basis and backed by RMBS, and therefore not eligible for key regulatory benefits.

“All in all, you will have to see a premium,” he said. “To me it will be with a ‘2’ handle.”

He said that Singaporean covered bonds trade in the context of 8bp-9bp over mid-swaps in five years, and that a new benchmark would have to pay at least 3bp-4bp of new issue premium and probably come at 13bp-14bp over.

“If they were to come inside 20bp and pay only 4bp-5bp more than this I would be a bit surprised,” he added, noting that Arkéa had to pay a 6bp new issue premium last week on a long five year and that MMB SCF paid 21bp over for a seven year French covered bond.

Comparables circulated by the leads also included alongside Singaporean issues five year Australian and Canadian paper quoted at 3bp-7bp over, mid.

“It will be interesting to see where the SMBC bond prices,” said an analyst. “In this low yield environment, asset managers could be interested in the product.”

Goldman Sachs, SMBC Nikko, Barclays, BNP Paribas, Crédit Agricole and UBS are leads.

MünchenerHyp finished its roadshow on Thursday, having met over 50 accounts, and this (Monday) afternoon announced that it will issue its first Ecological ESG Pfandbrief, a EUR500m no-grow long five year benchmark, in the near future, with launch expected tomorrow. ABN Amro, DZ and HSBC are leads.