The senior unsecured market took centre stage this (Monday) morning, with four deals out, as the euro covered bond market showed little sign of activity aside from a Terra BoligKreditt mandate, and with pbb said to be put off sterling by a basis swap making for unattractive levels.

Norway’s Terra BoligKreditt announced this afternoon that it has mandated BNP Paribas, Commerzbank, Natixis and UniCredit as leads for its next euro covered bond benchmark. The deal will follow a European roadshow starting on 22 October, subject to market conditions, it said.

The last Norwegian benchmark covered bond was a Eu1bn six year SpareBank 1 Boligkreditt issue on 22 August that was priced at 17bp over mid-swaps. Terra last tapped the euro benchmark market on 12 June with a Eu650m seven year deal priced at 55bp over mid-swaps.

Meanwhile this morning Italy’s Intesa Sanpaolo and Banco Popolare, Dutch issuer F van Lanschot, and UniCredit Bank Austria were taking advantage of a window in the senior unsecured market, with a rally in Italian senior paper of up to 65bp last week and a well-received Eu500m three year deal for Mediobanca from Friday said to have encouraged Intesa and Banco Popolare to tap the market.

RBS covered bond analysts on Friday said that Mediobanca’s deal will provide some indication of where demand for Italian covered bonds other than Intesa Sanpaolo and UniCredit can be found. These are the only two Italian banks to have sold benchmark covered bonds this year, although a syndicate official this morning said other issuers from the country are considering coming to market before the end of the year. Mediobanca’s deal was priced at 320bp over mid-swaps, and was said to be trading well.

Nearly two weeks have elapsed without benchmark euro covered bond supply, with a Eu500m seven year Deutsche Hypothekenbank Pfandbrief the last deal to have been priced, on 25 September. Syndicate bankers today said the deal pipeline in euros is thin, and that blackouts and very well advanced to completed funding programmes for the year point to subdued primary market activity.

“I don’t see a big wave of covered coming, but you never know,” said one.

October brings a large amount of redemptions, especially of French government bonds, but a syndicate banker said there was no sign of French covered bond issuers looking to tap the market imminently.

Away from euros market participants are awaiting a 144A US dollar issue from NordLB, which would be the first German issuer to tap the US market since 2006. The bank carried out investor work last week, and Bank of America Merrill Lynch, Barclays, BNP Paribas, Credit Suisse and HSBC have the mandate for the deal. Today is a public holiday (Columbus Day) in the US.

Also engaging with investors last week was Deutsche Pfandbriefbank (pbb), albeit in relation to a possible sterling covered bond deal, for which Barclays and UBS were mandated. Syndicate bankers away from the leads last week expressed some scepticism about the project, and a lead syndicate banker today said that the basis swap was disadvantageous for a sterling move by the issuer.