BRFkredit is set to launch an inaugural euro benchmark covered bond in a move that an official at the Jyske Bank subsidiary said will reduce its refinancing of Danish krone bonds while taking advantage of funding opportunities in the European market.
Sparebanken Vest Boligkreditt on Wednesday sold a Eu500m five year covered bond that was twice oversubscribed at the same time as achieving “ambitious” pricing, and an official at the Norwegian issuer said that recognition of the credit is increasing.
Nordea is expected to establish a distinct Finnish covered bond issuer as part of a strategy whereby its Danish, Finnish and Norwegian banking subsidiaries will become branches of the Swedish parent, a move that will be put to the group’s annual general meeting next month.
Spreads on Danish covered bonds being sold in the latest refinancing auctions widened in early sales in line with the pressures afflicting the broader financial markets, according to market participants, while the announcement last week of a planned Nykredit IPO has also been in focus.
Swedbank attracted the most demand of any euro benchmark covered bond this year on Wednesday, pricing a EUR1.25bn five year issue at only a modest new issue premium (NIP), and SEB yesterday (Thursday) built upon the template to issue a EUR1.5bn five year at the same level.
SCBC launched the first euro benchmark covered bond of the year from Sweden on Tuesday, attracting EUR1.4bn of orders for a EUR1bn (SEK9.28bn) five year, and bankers said the high quality issue appealed to risk-off investors after volatility had returned to financial markets.
The Central Bank of Savings Banks Finland sold its second public bond issue on Tuesday, choosing what proved to be a slim window of stability to print a €250m two year senior unsecured FRN that the bank’s head of treasury said will fund a mortgage bank the group is establishing.
Nordea Eiendomskreditt attracted £425m of orders for a £400m (€545m) three year floating rate covered bond on Wednesday, which, alongside similar issues for Lloyds beforehand and Bank of Nova Scotia afterwards, bankers said shows sterling to be an attractive option for issuers.
Standard & Poor’s said on Tuesday that although there are concerns about the health of the Swedish housing market, its ratings of covered bonds in Sweden already reflect such risks, with the rating agency citing state support and resilience of its ratings to a sharp fall in house prices.
Swedish banks must tighten the internal models used to calculate their risk weightings and capital requirements, the Swedish FSA said, but it and Swedish bankers warned that standardised risk weights, as are foreseen under so-called Basel IV, could increase risks in the banking sector.