Covered bond proponents could be forgiven for enjoying a place in the sun that the ABS market had previously made its own. But those heading to Barcelona this week would do well to resist the excesses of those they are supplanting and focus on making sure that covered bonds do not suffer a similar fate.

Before the onset of the financial crisis, innocents being approached by a tall dark stranger in El Quatre Gats were more likely to be asked (in admittedly poor English) “Come with me to CPDO” than the town of Oviedo to which Javier Bardem invites Rebecca Hall and Scarlett Johansson in Woody Allen’s Vicky Cristina Barcelona.

Girls Aloud (who else?)

Despite having an agenda as long as a toilet roll, the IMN Global ABS conference that for a few years took place in Barcelona was all about deal-making – before, perhaps, a trip to the Baja Beach Club. (Although the extent of ABS bankers’ partying should not be exaggerated – this was, after all, a group that was chastised by Girls Aloud for not dancing enough at one bank’s event).

Much has changed since then. Although the ABS world has pulled itself up from the depths of the Edgware Road and decamped to the lawmakers’ doorstep in Brussels, the tone of the event has changed. Indeed the tag-line of the first post-Lehman ABS conference sounded more like a Soviet anthem: “Regroup and rebuild together!”

As covered bond market participants make their way down to the European Covered Bond Council plenary tomorrow (Wednesday) and Euromoney conference on Thursday, and walk down streets their ABS peers previously trod, they would do well to learn the lessons of the ABS market’s history.

After this year’s volatility, market participants can be forgiven for hoping for a little levity in the sun this week – “getting solidly drunk,” was top of one syndicate official’s wish-list ahead of the events.

The corresponding Berlin covered bond events in 2007 are remembered as a time when the two sides of the market could come together after the first breakdown in jumbo market-making and lay the foundations for a restart in issuance that followed. Another banker’s wish for Barcelona – “the opportunity for issuers to have direct contact with investors” – could therefore be considered a worthy ambition given the lack of euro benchmark issuance since the beginning of last week and gloom pervading bank funding in general. However, some investors have complained that their interaction with issuers and their leads can too quickly turn into a sales pitch.

Perhaps the best that can come out of Barcelona is a focus on the underlying challenges facing the market, with the shape of the new global financial architecture currently being drawn up by regulators. As Dhiren Shah on Credit Suisse’s covered bond and SSA syndicate desk suggests: “It will be a chance for a lot of people to add their views and discuss issues like transparency, regulatory changes, the new developing markets, and US dollar denominated covered bonds.”

Long term solutions rather than quick fixes are what the market needs.

One investor who will be absent this week told The Covered Bond Report this morning: “I wish you a great day of reflection in Barcelona – the covered bond market needs it a lot in these times.”

In the meantime, we wish you all the best for the conference and that some of you, at least, will be granted one banker’s desire: “Me winning all the awards.”

¡Buena suerte!