Nordic FIs & Covered spoke to Ralf Burmeister, senior portfolio manager, Deutsche Asset & Wealth Management, about his views on Nordic banks, covered bonds and regulations.

Negative interest rates will squeeze Swedish banks’ margins and reduce their profitability, Moody’s said on Monday, after Sweden’s central bank reduced its repo rate from 0.0% to negative 0.10% on February 12.

Pohjola Bank launched the OP group’s first benchmark transaction of the year on Tuesday, a Eu1bn seven year bond that took advantage of a lack of supply in the senior unsecured market coupled with strong demand.

The start of the first Danish auction season to include sales of adjustable rate mortgage (ARM) bonds at negative yields was hit by nervousness about the Danish currency and interest rates on Monday, with yields backing up more than 30bp, but levels and bit-to-covers improved from Tuesday onwards.

Danske Bank tapped into strong demand in the covered bond market this week to launch the first Nordic euro covered bond benchmark of 2015, a Eu1bn (Dkr7.44bn) long five year issue that attracted over Eu1.7bn of orders and achieved pricing flat to its curve.

After a fairly ugly December edition of our Covered Bond Sentiment Index (CSI), the first index reading of 2015 (the 25th overall!) looks a little bit better.

Nykredit sold a debut Additional Tier 1 transaction yesterday (Thursday), a Eu500m (Dkr3.72bn) 6.25% perpetual non-call 5.7 deal that an official at the Danish issuer said achieved a satisfactory result for an inaugural transaction.

Svenska Handelsbanken launched its inaugural Additional Tier 1 (AT1) issue on Wednesday, a $1.2bn (Eu1.05bn, Skr10bn) perpetual non-call six deal that achieved the lowest coupon on a US dollar AT1 and attracted $4.7bn of demand.

DNB Bolgikreditt made its sterling covered bond debut on Monday with a £250m (Nkr2.90bn, Eu336m) five year floating rate, and an official at the issuer said the maturity, format and currency suited its needs.

A partial waiver from certain CRR requirements proposed by the Swedish FSA to reduce concentration risk would be credit positive for Swedish covered bonds, according to Moody’s, as it would allow programmes to maintain protections against market risks.