DLR Kredit on Wednesday for the first time issued senior secured debt pursuant to Section 33e of Danish covered bond legislation, selling Dkr4bn (Eu536m) of what are also known as Junior Covered Bonds.

Adjustable rate mortgage bonds offered by Danish mortgage credit institutions met with strong demand over the first four days of end-of-year auctions, with bid-to-cover ratios higher than recent years and spreads some 10bp tighter than market levels before the auctions.

Adjustable rate mortgage bonds being sold by Denmark’s mortgage banks during end-of-year auctions starting on Monday will include a greater share of three and five year bonds than ever, according to analysts, although this is only partly due to borrowers recently taking out loans with longer fixed interest periods.

Denmark’s Jyske Bank sold its first senior unsecured bond in the public markets since May 2011 on Tuesday, a Eu500m two-and-a-half year floating rate note that completes the Danish bank’s prefunding of redemptions due in 2013.

An Irish Senator’s call to establish a new covered bond system incorporating the Danish balance principle has been rejected by the country’s Minister of Finance, who said he is “very supportive” of the country’s existing covered bond framework.

Covered bonds should count as Level 1 assets under CRD IV, the ECBC argued in a position paper released on Monday, with this treatment particularly important for domestic covered bonds in Denmark as it would otherwise be “simply impossible” for the country’s financial institutions to fulfil LCR requirements.

Danish banks drew down some Dkr34bn (Eu4.96bn) of three year loans in a second LTRO held by the country’s central bank on Friday, a take-up that analysts considered limited and as likely to have little market impact.

Ringkjøbing Landbobank has entered into a joint funding arrangement with BRFkredit whereby the mortgage bank will finance the regional bank’s real estate loans through SDOs.

Spreads on one year adjustable rate mortgage (ARM) bonds sold by DLR Kredit narrowed versus Nykredit ARM bonds on the second of two days of auctions by DLR, said analysts, after the issuer obtained a preliminary triple-A rating of its Capital Centre B issuance from S&P.

The Covered Bond Report’s Neil Day spoke to Merete Poller Novak, head of strategic funding and debt investor relations at Jyske Bank, about the bank’s funding strategy and developments in the Danish banking industry.