Nykredit Realkredit sold its tightest syndicated Swedish krona covered bond today (Thursday), a Skr5.5bn (Eu614m, Dkr4.58bn) one year issue, after on Monday kicking off the latest round of auctions for refinancing of ARM bonds.
The Danish government and several opposition parties last Thursday (6 February) agreed on legislation aimed at reducing refinancing risk in the country’s mortgage system, after the central bank said S&P had made a positive statement about the bill.
A proposal for conditional mandatory extension of some Danish covered bonds is a “step in the right direction” but does not fully eradicate mortgage banks’ refinancing risk, S&P said yesterday (Wednesday), and an issuer said the rating agency’s intervention could be helpful.
Danish mortgage banks have begun announcing their plans for the forthcoming auction season of more than Dkr200bn (Eu26.8bn) of ARMs bond sales, while Danish MPs launched the latest salvo in the ongoing battle for covered bonds to be included as Level 1 assets in LCRs.
Standard & Poor’s upgraded covered bonds issued out of BRFkredit’s General Capital Centre from AA- to AAA on 27 December, citing higher than expected levels of overcollateralisation for the programme.
The Danish parliament will tomorrow (Friday) discuss government legislation on conditional forced maturity extensions in mortgage bonds for the first time, with the final draft softer than the initial proposal in a bid to address investor concerns.
BRFkredit, Nordea Kredit and Realkredit Danmark finished the latest round of sales to refinance ARM bonds last Friday (29 November), with analysts noting that spreads were the lowest since before the crisis and that Nordea achieved the lowest absolute yield ever at an auction.
DLR Kredit and Nykredit Realkredit wrapped up November auctions for the refinancing of their ARM bonds yesterday (Wednesday), with officials at both institutions highlighting the high quality of bidding.
Danske Bank is exploring investor interest in Tier 2 debt in the three Nordic currencies and depending on feedback could launch a deal, which would be its second Tier 2 issuance this year, after a September deal in euros.
The Danish government yesterday (Wednesday) moved decisively to address concerns about refinancing risks in its mortgage system by announcing that from 1 January many covered bonds, including those related to ARMs, will face forced extension in certain stressed scenarios.