The pipeline for euro benchmark supply is thin, despite primary remaining “an issuer’s market”, according to syndicate bankers. Sumitomo Mitsui Trust Bank has nevertheless firmed up its covered bond debut plans in euros, and CCDJ will tomorrow (Tuesday) hold calls for the first dollar benchmark since May.

After bumper supply the week before last, no new euro benchmarks were issued last week, with the sterling market seeing the only new benchmark covered bond, a Deutsche Pfandbriefbank AG (pbb) £500m three year Sonia-linked first.

A syndicate banker said despite the lack of supply in euros, it remains an issuer’s market, with transactions in the 10-15 year space performing particularly well.

“Saying that, you also could easily do a five year,” he added, “there being such a dramatic undersupply at the moment. Anything you want, you can do.

“As far as I’m aware my pipeline is empty, but let’s hope it’s not as quiet this week as last.”

Nothing in the past week has undermined the fundamentals supporting the asset class, according to another syndicate banker, who said spreads are proving resilient and constructive.

“We’re coming to quarter end,” he said. “Sometimes it’s not the perfect time to do things, but I’m not convinced that’s really the case for a covered bond.

“Some people are looking,” he added, “and some people are looking harder, but nobody is really biting.”

Sumitomo Mitsui Trust Bank (SMTB) is set to become the second covered bond issuer from Japan, having today announced a series of fixed income investor calls commencing on Wednesday for a seven year euro benchmark, with launch expected in the near future, subject to market conditions. It completed a non-deal roadshow on 16 September.

A banker away from the leads said he expects the debut issue to go well.

“SMBC, the first Japanese issuer, was very encouraging” he said, “so unless this issuer is deviating substantially in quality, I would be surprised if it didn’t work properly.”

Goldman Sachs, BNP Paribas, Crédit Agricole, Barclays, UBS and Daiwa Capital Markets have the mandate.

Fédération des caisses Desjardins du Québec (FCDQ, ticker CCDJ) today announced plans for a three year US dollar benchmark-sized 144A/Reg S covered bond, with a series of fixed income investor calls commencing tomorrow (Tuesday). BMO, Barclays, Citi and UBS have the mandate.

The new issue is set to be the first US dollar benchmark since HSBC Bank Canada launched a $1bn (€860m) three year deal on May 7.

CCDJ’s last US dollar benchmark, a $1bn three year deal, was launched in November 2019. It sold a €500m-no grow five year issue on 17 September.

BlueStep Bank is set to launch its second covered bond soon, having today announced plans for a five year floating rate note. The Swedish issuer is targeting a size of SEK1bn (€95m).

The non-conforming lender sold its first covered bond, a SEK1.7bn three year transaction, on 23 April.

Danske, Nordea and SEB have the mandate.