The primary market in covered bonds was quiet today (Monday), with issuers such as Kommunalkredit Austria and NordLB that recently roadshowed yet to proceed with deals, but senior unsecured and SSA supply this morning showing the new issue  market to be receptive.

Goldman Sachs, Nordea and UBI Banca launched new senior unsecured issues in euros this morning, while the city of Madrid was among issuers in the SSA market, with syndicate bankers noting that the deals were being well absorbed. Italy’s UBI Banca, for example, turning to the senior unsecured market after having sold a Eu1.25bn 10 year covered bond at the end of January, is said to have drawn more than Eu4bn of orders for a Eu1bn five year deal.

The covered bond market got off to a comparatively slow start, but syndicate bankers were confident that deals would be launched this week. Market conditions are accommodative, they said, with weaker than expected US non-farm payrolls on Friday largely a non-event.

“The broader market is stable and the window is definitely open,” said a syndicate official. “A few guys are waiting to see how today goes.”

Covered bond issuance candidates include Kommunalkredit Austria and NordLB, which last week finished roadshows in connection with a public sector issue and aircraft Pfandbrief, respectively. A syndicate official also said that an obbligazioni bancarie garantite (OBG) issue has been mandated, but that he does not know the timing of this. Commerzbank has also been on a roadshow, of its SME covered bond programme, but is due to be reporting fourth quarter results on Thursday and a deal is understood to be unlikely before then. [Commerzbank information added.]

Kommunalkredit Austria and NordLB held calls with lead managers today to decide on their next steps, but had not made any public announcements by the time of publication.

Syndicate officials familiar with the new issue projects said that the issuers’ roadshows were positively received, but that the banks are carefully weighing their next moves, with timing being key.

In the case of NordLB, the niche nature of its planned aircraft Pfandbrief offering means that the issuer will not rush to the market, he added, and is continuing to engage with investors.

Kommunalkredit Austria, meanwhile, has to consider the impact of discussions about the future of nationalised Hypo-Alpe-Adria Bank, with the creation of a bad bank the option reportedly favoured by the Austrian government but letting the bank go insolvent an option that has also been discussed.

HSBC, LBBW, Natixis, Raiffeisen Bank International and UniCredit have the mandate for a Kommunalkredit Austria deal, with a syndicate official at one of the leads saying that seven years is the targeted maturity.

The Austrian public sector lender sold a Eu500m five year fundierte Bankschuldverschreibung in September, its first benchmark covered bond since 2011, and the September 2018 issue is trading around 22bp over, after having been priced at 30bp over, according to a syndicate banker.

Commerzbank, DZ Bank, NordLB, Société Générale and UniCredit are working with NordLB, with a syndicate banker at one of the leads indicating that a new issue was probable for this week.

Peripheral covered bond supply has been limited so far this year, with Spanish issuers said to be in no hurry to come to market and also interested in senior unsecured opportunities. BBVA is on the road for a euro Additional Tier 1 (AT1) issue and syndicate officials said this is very much in a focus.