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.
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.
Danish lenders are responding to regulatory and rating agency pressures to reduce the share of adjustable rate mortgages (ARMs) with the launch of Cita-based loans and a revival of fixed rate callables, with Moody’s highlighting Nordea Kredit’s success in the latter as credit positive.
Nykredit Realkredit is planning a roadshow for a senior secured issue that will be its first euro benchmark where the proceeds are being used for covered bond overcollateralisation purposes rather than, as previously, for reasons of CRD compliance.
Nykredit Realkredit drew Skr50bn of orders when it sold Skr10.3bn (Eu1.18bn, Dkr8.81bn) of one year SDOs backed by Swedish mortgages in its third such sale last Thursday (August 29). Meanwhile DLR Kredit rounded off the latest Danish auction season today (Thursday).
DLR Kredit will align its sales to coincide with those of its peers when the next Danish auction season begins in November, with the issuer having attracted weaker interest when finishing off the latest round of sales this week, according to an official at DLR Kredit.
Ane Arnth Jensen, managing director of the Association of Danish Mortgage Banks (Realkreditrådet), spoke to Nordic FIs & Covered about regulatory issues that could impact Denmark’s system.
Standard & Poor’s expects a shift in the Danish mortgage market towards longer term and CITA-linked loans, despite questions about their popularity in light of the costs associated with such mortgage products.
Moody’s has upgraded Swedbank because it considers that the bank’s credit profile has strengthened, and Fitch revised the outlook on Danske Bank from negative to stable due to lower risk from its Ireland exposure.
DLR Kredit is planning to launch its second senior secured issue later this month, a Dkr2bn (Eu268m) maximum deal, while Nykredit has become the first Danish mortgage bank to take advantage of legislative changes allowing §15 issuance out of RO capital centres.