Danish lenders are responding to regulatory and rating agency pressures to reduce the share of adjustable rate mortgages (ARMs) with the launch of Cita-based loans and a revival of fixed rate callables, with Moody’s highlighting Nordea Kredit’s success in the latter as credit positive.
Nykredit Realkredit is planning a roadshow for a senior secured issue that will be its first euro benchmark where the proceeds are being used for covered bond overcollateralisation purposes rather than, as previously, for reasons of CRD compliance.
Tight spreads tempted SEB to bring forward Q1 2014 issuance plans and launch a Eu1bn seven year covered bond benchmark on Monday, the bank’s head of treasury management told Nordic FIs & Covered.
Stadshypotek priced a Eu1bn seven year covered bond yesterday (Wednesday) to kickstart what could be a series of Nordic FIG deals in euros as issuers from the region emerge from blackouts and face enticing spreads and cross-currency levels.
New measures announced by the Norwegian Ministry of Finance for how banks calculate capital requirements for mortgage loans under the IRB approach are credit positive because they ensure retention of capital, Moody’s said on Monday.
A proposal by Sweden’s FSA to oblige lenders to suggest mortgage loan amortisation plans to some borrowers could, if implemented, lead to increased paydown rates and eventually a possible decrease in target OC in some Swedish covered bond programmes, according to Standard & Poor’s.
Covered bonds are virtually as liquid as government bonds, according to a “very preliminary” draft ranking released by the European Banking Authority yesterday (Wednesday), which market participants have said puts the asset class in a strong position to be considered as Level 1 assets in Liquidity Coverage Ratios.
Nordic covered bond markets have always been at the forefront when it comes to maturity structures. Florian Eichert, senior covered bond analyst at Crédit Agricole CIB, considers the case for conditional pass-through covered bonds in the Nordic region.
Swedish banks will kick off the Q3 earnings season next week. Alex Sönnerberg, Nordic DCM Origination, Crédit Agricole CIB, considers the prospect of them emerging from blackouts with new euro benchmarks.
Finland’s savings and cooperative banking groups are exploring covered bonds as a funding tool, although no decisions have been made, representatives of the banks told Nordic FIs & Covered.