The omens for the New Year reopening are good, according to syndicate bankers, with positive news on the Brexit and trade fronts, as well as fresh liquidity from investors and weighty ECB bids set to support issuance. But a short first week and Epiphany could result in a later start than 2019.

Euro benchmark issuance kicked off in earnest on Wednesday, 2 January this year, with seven deals totaling €6.5bn hitting the market by the end of the first week, as well as a sterling benchmark.

However, with 2 January 2020 being a Thursday and parts of Europe, including some German states, off on Monday, 6 January, syndicate bankers said that issuance might not begin until the Tuesday of the second week (7 January).

“I could see a lot of people using that phase to extend their holiday until 7 January before kicking things off,” said one.

“Issuers have done a lot this year, so I don’t think there will be a huge rush,” he added, “and I can see them having a much more relaxed start to the year.”

But another syndicate banker said issuance in the first week should not be ruled out.

“If the market continues to be strong, why wait?” he said. “There are always enough people around, the only difference this time being the holiday on the 6th and the possibility of them not returning on the 2nd and 3rd.”

Syndicate bankers also said that there was a slim possibility of New Year trades being announced prior to Christmas.

“It was the case last year that things were announced towards the end of this week,” added the syndicate banker, “which probably won’t be the case this year, but never say never.”

Syndicate bankers said that last week’s decisive UK election result and the subsequent increased likelihood of a 31 January Brexit date relieved some of the uncertainty that has periodically plagued the market for over three years. One said Boris Johnson’s victory removed a “big psychological block” from the market environment, as his strong parliamentary majority should now be in a position to secure the month-end departure date.

“It adds some positive background noise, no more than this,” he said, “but a different outcome would most likely result in a psychological burden.

“Given that the Brexit thing seems to be more or less out the way,” he added, “and its quiet on the Chinese front, there is no reason why the market shouldn’t start in style early next year.”

Another banker said the positive signals amid the ongoing trade war between China and the US were contributing to an overall healthy market environment for the start of 2020, especially when compared to the start of 2019.

“There’s clearly a lot more certainty now than there was this time last year,” he said, “when QE ended and we were in a winding-down phase in Q4.”

However, he said that despite more favourable market conditions, the first deals in January are unlikely to be higher beta trades.

“It’s not healthy to the extent that we can kick off with things like Tier 2 from semi-peripheral countries,” he said, “and a lot of syndicate guys agree this is not the approach we’ll see in January.”

Another banker said that, coupled with the low yield environment, the attraction of higher beta assets remained a risk for covered bonds, but that the asset class’s “loyal followers” would buy regardless.

“The better the overall environment is, the easier it is for people to get involved in trades,” he said, “which, in addition with the 40% of the ECB, makes any Eurozone covered bond more or less a done thing before it even starts.”