SpareBank 1 Boligkreditt is lining up a euro benchmark that could be launched tomorrow (Tuesday), but bankers said there is otherwise a lack of candidates to take advantage of stable conditions. Scotia on Friday launched the first Canadian benchmark of the year, a $2.5bn deal.

Syndicate officials this (Monday) morning said the market was fairly directionless, with some widening of indices given a lack of an agreement over the weekend on the terms of private sector involvement (PSI) in writedowns of Greek government debt. But they said that market conditions were generally supportive.

“There’s no reason not to be able to do something,” said one. “It feels stable.”

Another said the mood is positive, but that issuers are reluctant to tap the market because they are expecting spreads to tighten, which was in his view a good decision.

Syndicate bankers cited approaching blackout periods, a better than expected senior unsecured market, and ECB LTROs as contributing to lessen issuers’ focus on the euro benchmark covered bond market. One said that he would like to see more euro issuance from UK names, and wondered whether French supply would pick up again, albeit with shorter maturities than the 10-12 year range that dominated French issuance in the first couple of weeks of the year.

Another syndicate official said that a burst of covered bond issuance in sterling seemed to have taken out supply in that currency, and noted that the dynamic in the covered bond market was similar to that in the senior unsecured market, which was tighter but quiet because of a lack of issuance candidates.

A mandate for SpareBank 1 – awarded to Barclays Capital, Deutsche Bank, Société Générale and UniCredit – hit the screens this morning, and the leads are working on defining the terms of the trade, which could be launched tomorrow.

“We are using today to gauge investor appetite for the name,” said a syndicate banker at one of the leads. “We are getting feedback to assess where we could have the most successful print.”

Syndicate bankers away from the leads said that a seven year maturity is under consideration. One said that seven years is often seen as an awkward maturity in that it can be too long for asset managers and yet not quite long enough for insurance companies and pension funds, but that he would recommend asset managers to get involved if the spread is right.

“It’s quite a strong issuer, and there is some scarcity value,” he said.

He said that he expects pricing to be based around with where a five year SpareBank 1 issue was trading in the secondary market – around 60bp plus – and where a Eu500m five year Terra BoligKreditt issue from last week was priced (73bp over mid-swaps).

Another syndicate banker said that he had heard a pricing “mumble” of the mid-70s, which would be wide of the issuer’s 2021 bonds as these were in the low 70s. A SpareBank 1 March 2017 issue was around 62bp over, he said.

Fellow Norwegian Sparebanken Vest Boligkreditt is embarking upon a roadshow today (Monday). It announced the mandate two weeks ago, with Commerzbank, DZ Bank, ING and Nordea Markets on the top line.

Bank of Nova Scotia sold a $2.5bn (Eu1.9bn/C$2.52bn) five year covered bond on Friday via leads Barclays Capital, Bank of America Merrill Lynch, Morgan Stanley, Scotia and UBS. The deal was priced at 77bp over mid-swaps, equivalent to 109.1bp over US Treasuries.

That compares with pricing of 135bp over mid-swaps, equivalent to 168.5bp over Treasuries, for a $1.5bn three year UBS deal on Thursday. UBS’s deal was its inaugural US dollar covered bond and the first dollar benchmark of 2012.

CIBC was the last Canadian issuer to tap the US market, selling a $2bn three year at 68bp over swaps and 111.15bp over Treasuries on 5 December, while BNS priced a $2bn three year at 48bp over swaps and 77.4bp over Treasuries at the end of October 2011.