Alex Sönnerberg, Nordic DCM Origination, Crédit Agricole CIB, looks at how the rest of the year might play out for Swedish covered bond issuers in euros in light of factors such as basis swap moves and funding needs.
Ralf Burmeister, senior portfolio manager for covered bonds at DB Advisors, find attractions across the Nordic markets, but adds an important caveat.
Norway’s Terra BoligKreditt announced a mandate for a new euro covered bond benchmark on Monday that, subject to market conditions, will follow a pan-European roadshow starting 22 October and could be the issuer’s first jumbo sized deal.
Covered bonds should count as Level 1 assets under CRD IV, the ECBC argued in a position paper released on Monday, with this treatment particularly important for domestic covered bonds in Denmark as it would otherwise be “simply impossible” for the country’s financial institutions to fulfil LCR requirements.
Timo Ruotsalainen, Aktia Real Estate Mortgage Bank managing director, said that a Moody’s downgrade of the issuer’s covered bonds from Aa1 to Aa3 last Friday, which was less harsh than had been expected, was a pleasant surprise and that any decision on a potential liability management exercise was now less pressing.
A joint council of Sweden’s Riksbank and Finansinspektionen has called for issuers to take the lead in releasing information relating to asset encumbrance after noting the potential risks of high levels of encumbrance, although they also highlighted the relative stability of covered bond funding.
The Covered Bond Report’s Neil Day spoke to Ulf Jakobsson, head of funding at Swedbank, about its senior and covered bond issuance in dollars and euros, asset encumbrance, and more.
Danish banks drew down some Dkr34bn (Eu4.96bn) of three year loans in a second LTRO held by the country’s central bank on Friday, a take-up that analysts considered limited and as likely to have little market impact.
The possibility of Aktia Bank launching a liability management exercise offering investors the option to switch into its covered bonds once it begins issuing directly next year has been raised by Aktia Real Estate Mortgage Bank, while some market participants have said that the Finnish group’s erstwhile partners could issue on their own.
The Swedish government may sell down all of part of its remaining 13% stake in Nordea, according to Sweden’s Dagbladet.