Syndicate bankers are hopeful that Banca MPS and Caisse de Refinancement de l’Habitat could provide highlights in the euro covered bond market this week after some lacklustre trades last week and ahead of a German public holiday on Thursday.

Banca Monte dei Paschi di Siena announced the mandate for its conditional pass-through euro benchmark-sized seven year OBG this (Monday) afternoon. Commerzbank, Crédit Agricole, Credit Suisse, MPS Capital Services, Santander and UniCredit will lead manage the trade, which they said will be launched in the near future.

The Italian bank’s last euro benchmark was a €1bn five year in January, which, at 190bp over mid-swaps, offered the highest spread on a benchmark covered bond outside Greece or Turkey since 2014 and attracted €2.3bn of orders. Banca MPS OBGs are rated A1/A+/AA (low) by Moody’s, Fitch and DBRS, while the issuer is rated Caa1/B/B (high).

A syndicate banker away from the leads suggested the main takers of the new issue would for the most part not be the “usual suspects” in the covered bond market.

“This is just for those guys who are comfortable with the underlying assets to have a bit of yield,” he said.

According to pre-announcement comparables circulated by the leads, MPS 2024 and 2025 paper was quoted at 109bp-112bp over. The July 2026 BTP was quoted at 86bp over.

CRH is poised to launch return to the market after six years’ absence, after giving a post-roadshow update on Friday specifying a seven to 10 year maturity. A syndicate banker at one of the leads said they were making sure the French issuer has “the best window” for its comeback trade, hence avoiding the last day of Q3 today, and that issuance can be expected from tomorrow onwards.

SR-Boligkreditt, which held a roadshow last week, is expected to issue its first green covered bond shortly, after the Norwegian issuer today said that a euro benchmark-sized seven to 10 year transaction will follow, subject to market conditions.

“The market feels strong,” said a syndicate banker, “particularly after last week, which was a bit subdued going by how primary trades were received.”

Oversubscription levels on most of last week’s new issues were modest and a weak €500m 10 year issue for Bawag PSK in particular raised questions over the level of investor demand.

“Tens didn’t really feel strong last week,” said the syndicate banker, “so with rates having now backed up a bit, sevens may benefit from deeper pockets and make better sense.”

And he said that after last week’s series of €500m trades, he is looking forward to a jumbo-sized transaction from CRH and for other deals to perform well.

“Hopefully they will encourage portfolio managers to be a bit more confident in primary,” he added, “at least more so than what we saw last week.”

Activity is expected to slow ahead of the German Unity Day public holiday on Thursday.

“You are either done by Wednesday evening,” said a banker in Frankfurt, “or you can revisit the case next Monday.”

Joost Beaumont, senior fixed income strategist at ABN Amro, said that supply could then moderate in the coming weeks as reporting season starts.

However, he still expects some €21bn of euro benchmarks to hit the market before year-end, following €114bn of issuance in the first three quarters and net positive supply of €34bn.