SBAB sold its first Additional Tier 1 issuance on Monday, Skr1.5bn (Eu163m) of perpetual non-call five notes split into fixed and floating rate tranches that were priced just 15bp wider than where Nordea last week issued krona AT1.
Nordea launched its second Additional Tier 1 issuance yesterday (Thursday), a multi-currency three tranche package including $500m, Skr2.25bn and Nkr1.25bn pieces for an aggregate of Skr8.15bn (Eu882m) that achieved the joint lowest coupon for an AT1 benchmark.
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.
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.
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.
Sweden’s banks emerged from blackout periods in style this week as Nordea Bank AB sold a Eu1bn 10 year senior unsecured transaction that attracted over Eu4bn of demand at a tight level yesterday (Thursday), and Swedbank today announced an inaugural Additional Tier 1 (AT1) transaction.
Nordea and SEB opened the latest earnings season this week with results that were resilient against the headwinds from autumn interest rate cuts and bode well for their peers, although the dividend and capital policies of the two Swedish banks contrasted.
Swedish house prices could fall in 2015 against a backdrop of stricter amortisation requirements and Europe’s deteriorating economic outlook, but Swedish covered bond ratings would likely prove resilient even if prices fell by 30%, Standard & Poor’s said yesterday (Wednesday).
Moody’s expects Swedish banks to make early, sizeable issuances of Additional Tier 1 (AT1) instruments, while Standard & Poor’s expects a similar trend across Nordic banks, which it said are pulling away from their European peers in terms of capital strength.
Swedish FSA proposals that new mortgage loans be amortised down to 50% of a property’s value according to a specified schedule would be credit positive for banks and covered bonds, according to Moody’s, but an industry representative suggested that implementation will be difficult.