Covered bond issuers were said to be taking stock of market conditions this (Monday) morning after a busy week of issuance and industry events last week, and while no new mandates hit screens syndicate bankers said the market is open for supply.

New issuance activity in the capital markets got off to a slow start this morning compared with last week, when a host of issuers jumped into the market to take advantage of a rally spurred by announcements from the European Central Bank, Federal Reserve, and German constitutional court – Morgan Stanley is in the market with a five year euro senior unsecured deal that is said to be four times covered, with some corporate supply also underway.

The covered bond deal calendar was empty of imminent new issue projects this morning, however, according to syndicate bankers.

“There’s nothing official in the pipeline,” said one, “but I think there will be deals. There’s nothing standing in the way.”

Recent covered bond benchmarks have not performed in a big way, he said, but are trading around re-offer.

The week ahead is comparatively clear of pivotal data and/or political events, noted another syndicate banker, which means that there is less of a perceived need to frontload issuance.

He said that the market is open for different types of transactions, stretching from tier two to covered bonds to senior unsecured.

“Whatever you want, you can take your pick and book your slot,” he said.

He acknowledged that the openness of the market might mean that some issuers might prioritise other markets over covered bonds, and keep these for “a rainy day”, and noted that some German paper was trading a few basis points wider than where it was last week, but that this was not a material development.

“The tightening for core Europe is on hold now,” he said.

Another syndicate official said that some German issuers were monitoring the covered bond market. Austria’s Erste Bank Group will tomorrow (Tuesday) start a roadshow ahead of “debt capital markets issuance”, but this is understood to unlikely be in covered bonds.

Heavy peripheral supply hit the capital markets last week, including the first Spanish covered bond supply in six months and rare Portuguese issuance, in the form of a Eu750m five year corporate deal for EDP. A liability management exercise by a southern European issuer is said to be under discussion.

A syndicate banker this morning said that this peripheral supply had been positive, although the reception had been timid for weaker names. There is scope for further cédulas supply, he said, depending on the issuer, format, and maturity.

“People are taking stock,” he said. “There’s been a lot of convergence trading, for example with the core underperforming non-core, and people are thinking about the situation.”

Another syndicate banker said cheap LTRO funding may deter some lower tier Spanish issuers from tapping the market.