The covered bond market was centre stage again Monday, with two new transactions announced, on the day that European central banks were due to launch their EUR60 billion purchase program.

Germany's Deutsche Kreditbank is planning its inaugural deal - a EUR500 million, five-year transaction - via joint lead managers Barclays PLC, BayernLB, Commerzbank AG and DZ Bank.

And ABN Amro Bank NV of the Netherlands is planning to sell a EUR2 billion five-year covered bond, via joint leads Deutsche Bank AG, Natixis and Royal Bank of Scotland Group PLC.

Price guidance was set at 100-105 basis points and subsequently tightened to 98 basis points over mid-swaps on the deal, which marks a long-awaited return to the covered bond market for ABN, following its takeover in 2007.

"It's definitely a welcome return for ABN to the benchmark market," said one banker. "It's going exceptionally well. They have been away for a long time, but the only reason was the [change of ownership]."

ABN Amro is now owned by Royal Bank of Scotland Group PLC, Spain's Banco Santander SA and the Dutch state.

Covered bonds are highly rated bonds issued by banks to refinance residential mortgages or public-sector loans that remain on the lender's balance sheet.

Banks are required to maintain the credit quality of the pool of loans, sometimes in accordance with specific covered bond legislation. Unlike mortgage-backed securities, investors have a claim both on the bank that issued the bond as well as the assets underlying it.

Covered bond issuance has rocketed since the European Central Bank announced in May that it would buy EUR60 billion of covered bonds to support bank funding and counter the impact of the credit crunch.

The ECB outlined further details of its program in June, and last Thursday said that much of the purchasing will be carried out by the euro zone's national central banks.

"It seems that 92% of the EUR60 billion will be allocated pro rata to each central bank according to its share of the ECB's share capital," said Richard Kemmish, head of covered bond origination at Credit Suisse in London.

"That still gives the ECB 8%, or around EUR5 billion, to allocate centrally, which is significant buying power in this market," he said.

It appears the ECB is leaving the detail of how to implement the purchases to national central banks, but this doesn't seem to concern the market.

"Issuance since the first ECB announcement has been spectacular, and there is still a reasonable flow of deals, which is encouraging," said Tim Skeet, head of covered bonds at Bank of America Merrill Lynch.

"The absence of precise detail on how national central banks will implement their purchases keeps all their options open and therefore minimizes disruption," he said.

A syndicate banker said that, judging by secondary market flows, there were no clear indications that the ECB or national central banks were yet buying bonds in the secondary market Monday.

Two sovereign borrowers were also active Monday. Poland is planning to sell a 10-year, dollar-denominated benchmark bond.

And Italy has set price guidance on a new 15-year syndicated government bond, also known as a BTP, maturing March 2025, at 19-24 basis points over the 2023 BTP.

The only non-bank corporate borrower in the market with a benchmark transaction was German sports apparel maker Adidas AG.

The company is planning to offer a EUR500 million, five-year bond at a spread of 200 basis points over mid-swaps.

-By Mark Brown, Dow Jones Newswires; + 44 (0)207 842 9485, mark.brown@dowjones.com (Sonya Cheung in London contributed to this report.)