The primary covered bond market could be busy in September and October due to higher than normal levels of redemptions and issuers looking to print ahead of the US mid-terms in November and the French presidential elections next year.
For euro covered bond issuers and investors, the French presidential election in April next year may be the main risk event of 2027 but it has already fueled speculation that French issuers will pre-fund later this year to avoid volatility linked to the vote.
Also coming up are the US mid-term elections on November 3 with 435 seats in the House of Representatives and 35 of the 100 seats in the Senate up for grabs. That vote will decide the balance of power for the second half of President Donald Trump’s second and last term in office.
The US is not a big issuer or buyer of covered bonds but the concern is a bad result for Trump could destabilise his administration and fuel uncertainty which would have a ripple effect across the international markets including covered bonds.
With September and October looking especially busy, covered bond issuers keen to print in the next two months may be forgiven for feeling a sense of dread but all is not lost.
A heavy supply of rich French covered bond cuisine will only stimulate the appetite for alternatives so non-French issuers or banks looking to use currencies other than the euro should still find demand.
Also, if some issuers plan to shut their books before the US mid-terms, the weeks after November 3 may work, particularly for smaller issuers fearful of getting lost in the earlier rush.
The rest of this year is looking busy but covered bond issuers can still succeed if they are prepared to be patient and then move quickly and decisively when their window opens.