Jyske Bank and BRFkredit are planning to merge, they announced on Monday, in a move that will step up competition in the Danish banking industry, with the potential for steep growth in mortgage lending for the combined entity and a tightening of BRFkredit bond spreads among effects cited.
Danske Bank could soon emerge with the first Nordic CoCo transaction, after having yesterday (Wednesday) announced that it will next week meet with investors in connection with a potential euro Additional Tier 1.
Nykredit Realkredit sold its tightest syndicated Swedish krona covered bond today (Thursday), a Skr5.5bn (Eu614m, Dkr4.58bn) one year issue, after on Monday kicking off the latest round of auctions for refinancing of ARM bonds.
The Danish government and several opposition parties last Thursday (6 February) agreed on legislation aimed at reducing refinancing risk in the country’s mortgage system, after the central bank said S&P had made a positive statement about the bill.
A proposal for conditional mandatory extension of some Danish covered bonds is a “step in the right direction” but does not fully eradicate mortgage banks’ refinancing risk, S&P said yesterday (Wednesday), and an issuer said the rating agency’s intervention could be helpful.
The adoption of elements of Denmark’s mortgage finance system is being explored by a taskforce that will next month present a report to the Icelandic government on possible changes to the country’s mortgage finance model.
Danish mortgage banks have begun announcing their plans for the forthcoming auction season of more than Dkr200bn (Eu26.8bn) of ARMs bond sales, while Danish MPs launched the latest salvo in the ongoing battle for covered bonds to be included as Level 1 assets in LCRs.
The European Commission will take into account “features specific to the EU banking system and financial markets” in addition to European Banking Authority (EBA) reports and international standards when deciding on covered bonds’ status in the LCRs, according to an EC spokesperson.
Standard & Poor’s upgraded covered bonds issued out of BRFkredit’s General Capital Centre from AA- to AAA on 27 December, citing higher than expected levels of overcollateralisation for the programme.
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.