The impact of the Norwegian housing market on covered bonds has been an ongoing topic for quite some time now. After strong growth of over 300% in the last 20 years, we’ve started to see the beginning of a correction in Norwegian house prices more recently.
The Swedish Bankers’ Association has called for liquidity assistance by central banks to be included in reporting of encumbered and unencumbered assets in a response to a European Banking Authority (EBA) consultation that finished last Thursday (20 March).
A Danish bill on conditional mortgage bond maturity extensions will help reduce liquidity risk, but does not on its own reduce refinancing risk in the country’s mortgage system, said Fitch, urging the industry to continue its efforts to tackle this risk by other means.
Stadshypotek priced a Eu1.25bn five year covered bond on Monday, the joint tightest post-crisis non-German Pfandbrief euro benchmark covered bond, with an official at the issuer noting that the prevailing euro market provided a “unique” funding opportunity for Scandinavian issuers.
SEB priced a $1.5bn (Eu1.09, Skr9.63bn) five year senior unsecured issue on Tuesday, with an official at the issuer noting a very strong response in terms of the volume and quality of demand.
Aktia Bank announced on Tuesday that it has mandated banks to organise a series of investor meetings for its euro benchmark covered bond programme, with an official at the issuer noting that the roadshow would be used to gauge market conditions and investor appetite.
The Swedish Bankers’ Association is lowering guidance on the LTV threshold above which new mortgages need to be amortised from 75% to 70%, while Riksbank governor Stefan Ingves said there is a case for increasing the mortgage risk weight floor to 25%.
A bill providing for the conditional maturity extension on certain Danish covered bonds removes refinancing risk for covered bond issuers and will have a “marked” credit positive impact on Nordea Kredit covered bonds, said Moody’s on Monday.
Realkredit Danmark met with strong demand for its first syndicated sale of a Swedish krona covered bond on Tuesday, a Skr6.2bn (Eu703m, Dkr5.25bn) dual tranche issue that lent more duration to Sweden-targeted Danish issuance, with October 2016 and October 2017 tranches offered.
Realkredit Danmark is planning its first syndicated sale of a Swedish krona covered bond, which could emerge next week after a day of investor meetings today (Thursday) in Stockholm.