Market wrap

• Commerzbank follows in five year

  Commerzbank priced its inaugural public sector benchmark covered bond on Tuesday. The latest issue was another five year, after Aktia Bank and Helaba broke the drought in that maturity on Monday. Despite investors becoming more risk averse, funding officials at Aktia and Helaba told The Cover on Tuesday that the five year was their choice of tenor and said this was not dictated by market conditions.

• Aktia and Helaba end five year drought

  Finland’s Aktia Bank and Germany’s Landesbank Hessen-Thueringen issued in the five year on Monday, ending the drought in this maturity. The moves suggest a change in risk appetite and a greater borrower willingness to offer new issue premiums.

• Busy week predicted for issuers

  The outlook for primary covered bond issuance is expected to improve next week as the market has begun to stabilise and issuers will look to take advantage of the short funding window that precedes summer. And with the longer term outlook expected to be less certain there is less incentive to postpone issuance.

• Fragile stability returns as German court hearing looms

  Markets opened on a surer footing on Monday but after last week’s volatility bankers want to see more stability before restarting primary issuance. Tuesday’s German constitutional court hearing on the ECB’s Outright Monetary Transactions programme will also have a strong bearing on sentiment, they said.

• Covered rout has legs; primary woes mount

  Secondary market selling of covered bonds slowed a little on Friday ahead of the US payrolls report. But bankers say the US data won’t make much of a difference as further selling is likely. In the primary market there is concern that if a deal is incorrectly priced, it will add to problems and potentially close the funding window for other issuers

• UniCredit cuts funding costs again

  The new issue covered bond market gathered momentum on Tuesday with two fresh deals, including one from UniCredit which should substantially cut its cost of funding.

• Popular tests appetite with tightly priced tap

  Banco Popular Español got the primary covered bond market off to a strong start on Monday after it took advantage of the prevailing demand for higher yielding bonds with a tightly priced tap of its March 2017 bond.

• UK absence no bar to execution

  Despite a UK holiday syndicate bankers are not ruling out deals on Monday, and there are still borrowers eager to execute bonds in run up to summer, they said.

• Dollar market beckons core as falling rates raise peripheral bid

  Core issuers planning benchmark covered bonds are eyeing the euro and dollar markets, said bankers on Friday. And although the peripheral rally has slowed, the prospect of an ECB interest rate cut should help support appetite for southern European supply.

• Primary rekindling seen next week

  The primary market remained dormant today but there are high hopes that a Northern European deal will surface next week. And, despite the Stadshypotek experience, syndicate bankers believe that with careful execution borrowers could even fund without paying a new issue premium