Realkredit Danmark (RD) took the unprecedented step of cutting a three year covered bond auction from Dkr2.72bn to Dkr1.90bn (Eu255m) on Wednesday, citing dissatisfaction with orders for the sale, although the bulk of the week’s issuance was relatively smooth.
Nykredit Realkredit attracted more than Eu2bn of demand for a Eu800m 12 year non-call seven Tier 2 issue on Tuesday, taking advantage of the reopening of the subordinated debt market after having announced its third quarter results last week.
Danske Bank announced third quarter pre-tax profits of Dkr4.7bn (Eu630m) yesterday (Thursday), 9% below consensus expectations on the back of negative interest rates in Denmark and low activity, although the bank maintained its net profit guidance for the full year.
Danske life insurance subsidiary Danica launched its first new bond issue since 2006 on Monday, a Eu500m (Dkr3.73bn) 30 year non-call 10 subordinated transaction that sold out at a level reflecting the challenging market conditions prevailing in credit markets this week.
Danske Bank launched a Eu1bn (Dkr7.5bn) five year covered bond on Tuesday amid a wave of supply that the market proved more than able to absorb, and further benchmarks are due early next week.
The latest Danish quarterly sales of bonds to refinance adjustable rate mortgages (ARMs) achieved healthy bid-to-cover ratios after Nykredit Realkredit kicked off activity on Monday, with longer dated paper offering relatively high spreads particularly well bid.
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.
The start of the first Danish auction season to include sales of adjustable rate mortgage (ARM) bonds at negative yields was hit by nervousness about the Danish currency and interest rates on Monday, with yields backing up more than 30bp, but levels and bit-to-covers improved from Tuesday onwards.
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.
Nykredit sold a debut Additional Tier 1 transaction yesterday (Thursday), a Eu500m (Dkr3.72bn) 6.25% perpetual non-call 5.7 deal that an official at the Danish issuer said achieved a satisfactory result for an inaugural transaction.