Dankse was first out of the blocks in a busy FIG market this week, tapping the market early Monday morning with a Eu500m (Dkr3.73bn) no-grow 12 year non-call seven Tier 2 issue that an official at the bank said wrapped up adjustments it had wanted to make to its Tier 2 capital levels.
A leaked document by European Commission staff circulating this week confirms statements from two Danish ministries last Friday that certain large, highly rated covered bonds will be eligible as Level 1 assets for Liquidity Coverage Ratio purposes, albeit with an overall cap of 70% and a haircut of 7%.
Swedbank restarted euro benchmark covered bond supply after two weeks without issuance on Wednesday, pricing its first such deal of the year in a busy week for the FIG market across asset classes, with other Nordic issuers variously tapping senior unsecured, subordinated debt, and floating rate covered bond markets.
Standard & Poor’s upgraded Realkredit Danmark senior secured issuance yesterday (Wednesday) following its lifting of parent bank Danske’s rating from A- to A Tuesday of last week, which came as part of wide-ranging BRRD-inspired bank rating actions.
The EC is steering toward keeping covered bonds as Level 2 assets for LCR purposes but allowing them to make up a larger share, according to sources, and an EC spokesperson said “talks are progressing well” about a solution addressing Danish concerns.
The Swedish FSA announced details of tighter capital requirements today (Thursday), which market participants said provide welcome but only partial clarification of the capital regime in Sweden, with outstanding questions about Pillar 2 requirements obscuring the outlook for AT1 supply.
The Nordic first quarter reporting season is well underway, with Danske today (Thursday) the latest to announce results. Mats Anderson, equity research analyst at Kepler Cheuvreux, says that results have been marginally better than expected, boding well for the rest of the year.
S&P upgraded Danske and took rating actions on Swedish banks on Tuesday in connection with a raft of actions on European banks to reflect less assumed government support given new resolution frameworks, and also flagged plans to incorporate this into covered bond ratings.