DZ Hyp is set to hit the market with a short 10 year benchmark mortgage Pfandbrief tomorrow (Tuesday) and at least two other issuers are said to be waiting in the wings, after the FIG primary market rode out the aftershocks of the US attack on Iranian nuclear sites.

FIG issuance in euros today (Monday) ranged from a €750m 6.25 year non-call 5.25 green senior unsecured issue for Royal Bank of Canada to a €400m perpetual non-call 5.5 AT1 for Greece’s Piraeus.

“It feels like business as usual,” said a syndicate banker. “Liquidity is still quite strong, lots of trades across the screens from senior to capital, across euros and dollars as well. When you look at the execution metrics from today’s trades, everything’s been quite positive, and the engagement from accounts has been quite healthy.

“In light of the news we’ve had, the recovery in the market is quite positive,” he added. “Rates are rallying a few bips, equities are calming down after the sell-off this morning, and credit indices are coming off the wides, so all in all it feels pretty good.”

DZ Hyp’s planned trade was announced early this afternoon, with launch expected tomorrow, subject to market conditions. ABN Amro, BayernLB, BMO, Commerzbank, DZ and Societe Generale have the mandate.

A syndicate banker at one of DZ Hyp’s leads said although the geopolitical developments gave the issuer pause for thought, they expect the transaction to go well.

“We convinced the issuer that this market is showing, if you will, cynical resilience against anything that happens in the real world, including bunker-busting bombs and the like,” he said, “and that the covered bond market does not give the impression of having been derailed by what is going on there.”

The new May 2035 issue will come after DZ Hyp printed a €500m February 2035 mortgage Pfandbrief on 2 April, at mid-swaps plus 47bp, alongside a €500m green August 2029 tranche, following a February 2032 deal in January.

“So a short 10 year is not uncharted territory for them,” said the lead banker, “but we have been on several deals recently between four and six years, basically one deal after another in the same sort of maturity, and the 10 year maturity will be appealing to people if only for the reason that it offers a change – at least that’s what we hope.”

The last benchmark covered bond in the 10 year part of the curve was a €1bn trade for BPCE SFH at 68bp on Monday of last week (16 June), which attracted a final book of €2.8bn.

According to comparables circulated by the leads, the DZ Hyp February 2035s issued in April were quoted at 44bp, mid, with Commerzbank February 2035s and MünchenerHyp March 2035s – both mortgage Pfandbriefe – at 45bp and 42bp, respectively, and LBBW public sector May 2035s at 41bp.

“Let’s see how things go tomorrow,” added the lead banker, “because we will try it then unless something very nasty and very unforeseen that might even derail covered bond markets occurs.”

At least two other issuers are said to be looking at issuing tomorrow, another core Eurozone issuer and one from further afield, according to syndicate bankers.

“If today’s trades are performing well, that will encourage further issuance,” said a banker on one of the mandates. “Covereds, seniors, Tier 1, RT1 – everything will be on screen tomorrow.”