Nykredit 3s well covered in auction start

Nykredit found stronger than expected demand for three year bonds on the first day of the Danish auction season on Wednesday.

Nykredit sold Dkr7.3bn (Eu980m) and Dkr1.1bn of one and three year bonds, respectively, with bid-to-cover ratios of 3.06 times for the one year bullets and 6.10 times for the three years.

“The auctions have been fairly good,” said a Nykredit official. “We had pretty good bid-to-covers, especially in the three years.”

The one year was sold at a yield-to-maturity of 0.3% and the three years at 0.69%. The one year pricing was equivalent to Cita plus 33.3bp, according to the issuer, which was in line with expectations.

Fitch on Monday assigned A/F1 long and short term ratings, with stable outlook, to Nykredit Realkredit and its Nykredit Bank.

Nykredit terminated its contract with Moody’s on 13 April and on 30 May Moody’s withdrew its ratings of the group’s covered bonds, but maintained unsolicited ratings for Nykredit Realkredit and Nykredit Bank.

The Danish group is understood to be in dialogue with Fitch regarding a rating for its covered bonds, although this is not expected to happen until next year. The more pressing impetus for Nykredit hiring Fitch is understood to be its short term rating of Nykredit Bank, with the F1 rating of importance to its commercial paper programme.

BRFkredit and Jyske Bank announced in interim results statements on Tuesday that they are expanding a joint funding model to commercial mortgages.

Under an agreement announced in February, Jyske and Sydbank have transferred home loans into BRFkredit’s capital centre E for funding through SDOs. On 10 July BRFkredit entered into a similar agreement with Arbejdernes Landesbank.

With effect from 1 September, Jyske Bank will be able to provide mortgage loans for commercial properties through BRFkredit, also funded through SDOs out of capital centre E.

Jyske said that the agreement does not affect existing co-operation with DLR Kredit and Nykredit.