Greece’s referendum on Sunday could pave the way for a quick reopening of the euro benchmark covered bond market at elevated new issue premiums, according to syndicate officials, even if uncertainty will remain and the market could close again at short notice.

(“Nai” being Greek for yes.)

The last euro benchmark covered bond was a Eu500m seven year for HSH Nordbank at 8bp through mid-swaps on 15 June.

“Everyone is looking forward to next week and keeping their fingers crossed,” said one banker. “It is a question of hopefully having gotten some clarity one way or the other.”

He said that issuers will have been encouraged by the market’s behaviour this week, even if there has been no issuance.

“The overall reactions have been rather modest,” he said. “There have been adjustments, but no sell-off – no panic.

“We might see some candidates sneaking through.”

However, another stressed the extent to which the referendum and its implications are pivotal.

“It’s very, very dependent upon what the Greek outcome is,” he said.

Syndicate officials acknowledged that any window might be only fleeting – particularly given the lack of clarity over what the next steps would be irrespective of the result – but said that this could encourage rather than deter issuance.

ABN Amro led a two-day reopening of the FIG market last week with a Eu1.5bn Tier 2 deal that attracted Eu8bn of demand during a window of optimism around Greece – a move that was vindicated when the primary market closed again.

“I think it’s quite hard to get the timing right nowadays,” said Daniëlle Boerendans, head of long term funding and capital issuance at ABN Amro Bank, “but in hindsight we couldn’t have done it better.”

No covered bond issuance emerged in that window and another syndicate official acknowledged that other asset classes, such as Tier 2, might again be more likely to see supply, although he said he wouldn’t rule out covered bond supply.

“For an issuer who has a large funding programme and wants to get something done before the summer, a covered bond could make sense as it is relatively low beta and stable,” he said.

New issue premiums would likely be elevated, said the syndicate officials, with one citing a figure of 10bp versus 5bp or 7bp levels seen on recent issuance.

Another said that those issuers with fewer covered bond funding needs or alternatives might steer clear of issuing, but that French or German names would be realistic candidates.

“Yes, a higher new issue premium would be required,” he said, “and you would need a brave issuer. Maybe a Pfandbrief, not necessarily wanting to print Eu1bn at any price, but Eu500m-Eu750m in a medium tenor.

“We have seen less issuance since June and the market is technically strong, with the ECB bid and a high level of redemptions, while spreads are stable on a swap basis and OK versus sovereigns. I would rather suggest using the window than running the risk of waiting as you don’t know what will happen and then it will be summer.”

The only deals officially in the pipeline are a Singapore debut from DBS, whose roadshow ends today (Friday), and an inaugural legislative South Korean issue from Kookmin Bank, which also recently finished roadshowing.