Slovenská sporiteľňa is set to open June euro benchmark covered bond issuance tomorrow (Wednesday), after having completed a roadshow and today announced a mandate for a EUR500m no-grow seven year, although one banker said market conditions mean it could be a “leap into the void”.

With overall market conditions remaining weak, there have been no new euro benchmarks since last Tuesday (28 May), when UniCredit Bank Austria and particularly SCBC encountered weak demand for new issues in between public holidays on Monday and Thursday.

However, the Slovak Erste Group subsidiary announced the mandate for its first euro benchmark this (Tuesday) morning, after having completed a roadshow, with Commerzbank, DZ, Erste and UniCredit as leads.

The deal will be only the second Slovak euro benchmark, following a highly successful trade for Intesa Sanpaolo subsidiary Všeobecná Úverová Banka (VUB) on 19 March. That EUR500m no-grow five year Aa2 deal attracted some EUR2.4bn of demand from 160 investors, and has since tightened from 28bp over mid-swaps to 20bp, mid, according to pre-announcement comparables circulated by the leads.

A syndicate banker on Slovenská sporiteľňa’s triple-A rated debut said the new issue should work well, with euro covered bonds still a safe bet, the market otherwise quiet, and the debutant able to offer a pick-up over core covered bonds – April 2026 covered bonds of parent Erste trade flat to mid-swaps, for example.

“Seven years is the right choice,” he added. “We will be able to offer a decent coupon by today’s standards.”

The May 2026 Slovak government bond trades at minus 8bp.

A banker away from the leads agreed that the deal stands a good chance of success, but said it represents something of a “leap into the void”.

“It’s very difficult to grasp what is going on at the moment because there is no activity to benchmark any given project against,” he said.

In spite of the quiet end to May and start of June, issuance in the first five months of the year of some EUR81.725bn, according to BayernLB analysts, was at its second highest level since 2012, only a little behind the EUR84.2bn of 2016. Indeed, issuance last month was unusually high compared with previous Mays, with its EUR12bn of euro benchmark supply the second highest – behind 2017 – of the past six years, also representing a rebound from below average supply for March and April.