The primary market is unlikely to reopen this week, according to syndicate bankers, who said a sustained lack of motivating factors for issuers will extend the summer break until at least next week and potentially further, despite previous suggestions mid-August could see a restart.

The covered bond market has now gone more than five weeks without any euro benchmark issuance, the last deal having been a €500m five year from South Korea’s Kookmin Bank on 8 July.

Some syndicate bankers had previously anticipated a reopening as early as this week, with northern Europe issuers last week cited as candidates to tap the market from today (Monday) onwards, but a syndicate banker said he would be greatly surprised were anything to materialise before next week.

“I think it’s still the summer break,” he said, “so people will take another week off and will not return earlier than next week, at the most ambitious estimate.”

In spite of the prolonged summer lull, the commotion that accompanied the coronavirus pandemic from March onwards has left very few market participants in any rush to return to their screens, he added.

“There’s nothing wrong with this,” he said. “We’re in special times and in that respect the break is well-deserved, and we can easily stand another week of taking it easy.”

He said he would not be surprised if there were no activity next week, either.

“Markets have proved they are receptive if need be,” he said, “but no one is in a rush, people have participated heavily in ECB funding schemes, and this all makes them very relaxed when it comes to their liquidity planning.

“I don’t know who’s exactly in need of liquidity at this stage, but I don’t think many are.”

Another syndicate banker, however, said next week could prove an opportune window for some euro benchmark issuance.

“I can’t be fully certain,” he said, “but if it were my trade, there’s no risk of competition next week, plus a few more investors will be back, and it will be a bit livelier in secondaries, so I’d opt for that.”

Covered bond spreads over the past month had moved a maximum of 1bp in either direction, he noted, adding to the feeling that the market is in a similar shape to its pre-summer condition.

“The thinking is that there’s not a lot of juice left in the spreads,” he said, “but still, there’s so much cash around and undersupply in the asset class that the technicals will work in favour for any new issue.”

A covered bond in the longer maturity range would undoubtedly be priced at or close to fair value, he suggested.

“Rates have gone so tight,” he said, “so anything up to 10 years will definitely work and anything longer will have 1bp-2bp of new issue premium but will still work as well.”