The second quarter got off to a slow start in the euro market today (Tuesday) and with market conditions improved but still weak after a sell-off last week issuers are unlikely to rush to tap the market during a short week, said syndicate officials, although one was more optimistic.

Markets opened on a fairly stable note this morning and, after some direction-seeking, are settling down on a more positive note, according to syndicate officials, with the Bund future, although still high, having come down and credit indices slightly tighter.

“The market tone is OK, a bit on the slow side,” said one. “It feels like a Friday, but the market isn’t that bad although it’s not the strongest.”

She said that she is not aware of any concrete new issue plans in covered bonds for this week, but that primary markets could get busy next week.

Factors cited as potentially deterring any new supply this week include central bank meetings, non-farm payrolls on Friday, and still cautious market sentiment. One said that market conditions are still pretty weak after a big sell-off last week, especially in senior unsecured.

On a positive note, however, syndicate bankers noted the relatively smooth reopening of Cyprus’s banks last week following the agreement of terms of a bailout package, although they said this in turn means the focus has returned to the political situation in Italy.

Opinions were split on the prospects for benchmark supply this week, with one saying that he would expect some new issuance tomorrow (Wednesday) or the day after, with a couple of core issuers looking at the market but not necessarily poised to pull the trigger.

“There’s nothing negative about the market, but nothing supportive either,” he said.

A Pfandbrief issuer is understood to have been eyeing the market, for example, without being under pressure to make a move.

Other syndicate officials were more reserved, noting that many market participants, especially in Germany, are still on holiday and that it might make more sense to wait until next week to forge ahead with new issuance, also given this week’s ECB meeting.

“The market is by all means open,” said one, “but my recommendation would be to wait.”

A “tipping point” may have been reached with the situation in Cyprus having been resolved, he said, and the Bund future may fall.

“It might make more sense to wait until next week to come out of hiding,” he added.

The last euro benchmark covered bond was a Eu500m five year for Bank of Ireland on 15 March.

Kreissparkasse Köln is marketing a Eu250m maximum seven year mortgage Pfandbrief at the 7bp over mid-swaps area for pricing next Wednesday (10 April) to refinance a Eu250m deal maturing on 12 April.