The volume of one year adjustable rate mortgage (ARM) bonds is set to fall again when Danish mortgage credit institutions hold their latest quarterly refinancing sales later this month, with Nykredit having yesterday (Thursday) announced a sharp reduction in its auctions of such bonds.
Danske Bank announced second quarter pre-tax profits 17% ahead of consensus expectations on Wednesday, with commissions, costs and loan loss provisioning driving the results while net interest income (NII) held up.
Nykredit Realkredit has confirmed it is targeting some Eu3bn (Dkr22bn) of bond issuance eligible for bail-in buffers over the next two years to bolster its capital after Standard & Poor’s downgraded it from A+ to A on Monday and left the rating on negative outlook.
Danske Bank and SBAB took advantage of last week’s reopening of the euro FIG market to issue Eu750m senior unsecured fixed and floating rate benchmarks, respectively, this week, as the better tone was maintained in spite of ongoing concerns about Greece.
Realkredit Danmark (RD) sold a Dkr42.4bn (Eu5.68bn) 18 month floating rate note – the largest ever FRN in the Danish covered bond market – in auctions from Monday to yesterday (Thursday), with the size reflecting changes in the type of mortgage being taken out and the maturity a debate over negative coupons in Denmark.
Standard & Poor’s on Tuesday placed Nykredit and DLR Kredit on CreditWatch Negative but affirmed its ratings of fellow Danish banks Jyske, Danske and Nordea Bank Danmark, after completing a review relating to the potential withdrawal of government support for the banking sector under the Bank Recovery & Resolution Directive.
Nykredit and other Danish covered bond issuers are introducing a new, simplified model to handle redemptions of callable bonds with annuity cashflows, writes Jørn Strunge, senior business analyst, Nykredit.
Jyske Bank achieved high international distribution with a Eu500m (Dkr3.73bn) three year FRN on Tuesday in spite of a weak financials market, and the bank might launch a Eu300m Tier 2 issue later this year before stepping up the frequency of its senior unsecured issuance.
Nykredit Realkredit sold Skr7bn (Eu758m, Dkr5.65bn) of July 2016 floating rate notes on Wednesday in spite of concerns over the possibility of investors having to pay issuers on FRNs if rates turn negative. Realkredit Danmark is meanwhile eyeing Norwegian krone and Swedish krona issuance.
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.