A German issuer is said to be eyeing an early restart for the euro covered bond market next week, which syndicate bankers said could make sense given benign conditions and the possibility of headline risk in September, even if a broader reopening is not yet expected.

The last euro benchmark covered bonds issued – DZ Hyp’s €750m and Crédit Mutuel’s €1bn trades – hit the market over a month ago, on 8 July.

Should a new issue be launched before next Friday (20 August), it would represent the earliest post-summer reopening of the euro benchmark market since 2017, when Münchener Hypothekenbank sold a €750m long nine year Pfandbrief on 16 August. It would, however, mean that the summer break would still have been longer than any in the past nine years with the exception of last year.

A syndicate banker said issuers have been asking for updates and that one, likely a German, could tap the market next week.

“I have a feeling there might be one or two issuers looking at the next one or two weeks,” he said. “I can also imagine at least one German issuer maybe looking at the next week.

“It’s always worth looking at the history,” he added, “and if you look at the last couple of years, either a German or a Nordic issuer could be the one to reopen.”

Indeed, Berlin Hyp reopened the fall season in the past two years, on 25 August last year with a €500m 10 year green Pfandbrief, and on 20 August 2019 with a €1bn trade. In 2018, Germany’s Aareal Bank and Norway’s Eika Boligkreditt restarted issuance together on 21 August.

Other bankers agreed that a German issuer is likely to be first to return, even though they said any move next week might be a bit premature.

“It wouldn’t be an impossibility of having issuance as early as next week considering that more and more issuers are contemplating those kinds of strategies,” said one. “But I do think that it will be limited, most likely, to German-speaking countries.”

Another syndicate banker said he was not aware of any firm plans, but that the market is open should anyone choose to issue.

“The market is open and constructive,” he said. “If anybody saw an advantage of going a little bit early in August rather than September, I’m confident that would work well.”

And with German elections and central banks meetings due in September, the first banker said an early move could make sense.

“While I don’t expect anything major from these events,” he said, “it somehow includes a bit of headline risk and a bit more caution from the investor side, so it could be a bit of a stop-go mode,” he said. “So it might be good advice to jump the queue and be early in the process after summer.”

“But I don’t expect to see a jumbo-sized transaction as the first one,” he added, “usually there is a smaller transaction, like €500m, coming to the market.”