Year-to-date European investor-placed benchmark covered bond issuance is about 30% lower than the already weak 2020 level, setting it on course for a record low in the full year. Transaction count has experienced a similar decline. The main causes of the 2021 year-to-date decline are issuers' renewed access to competitively priced central bank funding--which steered some banks toward retained rather than investor-placed covered bond issuances--and growth in bank deposits due to reduced consumer spending. Although covered bond redemptions until year-end could somewhat support the supply side, we expect 2021 investor-placed issuance to struggle reaching €70 billion.