At least one new issue project is said to be under consideration ahead of possible launch tomorrow (Wednesday) if market conditions are stable, with syndicate officials noting that no other window is likely to present itself given a public holiday in many parts of Europe on Thursday.

A syndicate banker said that his house was working on a few new issue projects across asset classes, including covered bonds, and that a deal could emerge at short notice for intra-day execution tomorrow, subject to improved and stable market conditions.

Strong economic data from Germany and a lack of major negative news apart from a Moody’s downgrades of Italian banks and covered bonds, which was widely anticipated (see separate article), were contributing to a more stable market today (Tuesday), according to the syndicate official, although he noted that volatility is still “around the corner”. The 10 year Bund yield rose today to leave behind a record low reached yesterday (Monday).

But the market remains nervous, according to other syndicate bankers, with one saying that uncertainty about Greece and CIF Euromortgage, and volatility surrounding Italy and Spain is making issuers reluctant to make a move to tap the market.

Christian Noyer

Christian Noyer, governor of the Banque de France and chairman of French supervisory authority ACP (Autorité de contrôle prudential), yesterday morning said that Credit Immobilier de France’s solvency level was very satisfactory and that ACP was looking for a lasting solution for the bank, which, according to RBS analysts, indirectly confirmed that asset quality issues were not the cause of CIF finding itself in a situation where it could not publish its audited 2011 reports on time and that CIF looks likely to be sold.

Another syndicate banker noted that although markets are nervous investors have cash that needs to be put to work, pointing out that European Financial Stability Facility (EFSF) bonds came tighter than secondary market levels in an auction today – the bailout fund raised Eu960m of five year bonds at an average yield of 1.83% on the back of bids of around Eu2.62bn.

“I wouldn’t be surprised to see one or two strong names reopen the market,” he said in relation to covered bonds.

Another banker added that in spite of whatever concerns they may have, French and German investors are cash rich.

Tomorrow would be the only window for supply this week, said syndicate officials, with Thursday a public holiday in many European countries and Friday generally not well suited for deal execution. CRH has been the most recently rumoured candidate for a new issue.