Besides the pursuit of deleveraging new regulatory measures also complicate the issuance of new bonds by banks. “We expect another year of active development of regulations for the financial sector, which will drive management to think more about the long-term structure of their balance sheets rather than taking advantage of low financing costs,” says Armin Peter of UBS. He points out that European banks were generally in better shape at the beginning of 2016, but can still be expected as single cases of crisis with the Portuguese Novo Banco last year.

Tight regulations can still provide some support for the issuance of new bonds, as some banks will need to raise additional capital and increase buffers against losses. “Much of the existing bonds of banks do not meet the new requirements for capital buffers. This means that once they mature, they will need to be refinanced,” said Sozo Davis, an analyst at Barclays.

Weak expectations for expansion of bank balance sheets come despite the incentive of the European Central Bank (ECB) aimed at lending. ECB measures still fail to support the covered bond market, mainly used to finance mortgages.