BPCE is planning to launch the first deal through a new SFH when primary market activity resumes, although this is not expected to occur until next week, with supply supressed by holidays and continued concerns about peripheral European sovereigns.

BPCE today (Tuesday) mandated Danske Bank, HSBC, Natixis, Santander and UniCredit for the deal, its first under France’s new legislation for previously structured covered bonds.

Although nothing new emerged over the weekend to exacerbate peripheral concerns, one syndicate official said that volatility witnessed last week was still a factor in keeping southern European credits away from the market and that others were also in no hurry to issue.

“The peripheral volatility last week paralysed that part of the market,” he said. “The lack of activity can be explained by a combination of this, and, on the core side, people being pretty well funded given that the first quarter was so intense.”

On top of this, many market participants are away from their desks.

“No issuers are willing to come to market when many investors are on holiday,” said another syndicate official. “The first week of May it will start again, but slowly, as Monday is a holiday in the UK and France.”

And one banker expecting to come to lead manage a new issue next week said that the earliest anyone would approach the market would be Tuesday.

“Our target strategy would be that we start marketing on Tuesday,” he said, “with launch probably on Wednesday, unless things go better than expected and we can price on Tuesday, too.”

BPCE held a roadshow in March to introduce investors to the product. The banking group previously issued through GCE Covered Bonds and Banques Populaires Covered Bonds, but rather than convert these under the new legislation, it will be issuing through BPCE SFH. Moody’s and Standard & Poor’s have assigned Aaa ratings to the covered bonds of BPCE SFH.

French issuers in general are expected to lead issuance when it resumes, as they have done so far this year. According to Michael Spies, covered bond analyst at DZ Bank, French issuers have accounted for 23% of benchmark supply in 2011, ahead of Spain on 19%.

“Although we expect the French covered bond-issuing community to resume its activity and further expand its dominant position, as things stand at present the Spanish issuers will face a much more difficult struggle,” he said.

French issuers took the highest share of the market despite some issuers waiting for the law allowing for issuance of obligations à l’habitat to become effective. Only one euro benchmark and one dollar have been launched since France’s Autorité de Contrôle Prudentiel (ACP) on 28 March gave the go-ahead for banks with existing covered bond issuers to make the switch to obligations à l’habitat. Crédit Mutuel Arkea Covered Bonds sold a Eu1bn 10 year issue on 30 March with an undertaking to convert its covered bonds and issuer to those described under the new framework, while Crédit Agricole Home Loan SFH sold a $1.5bn long three year deal on 13 April.