BRFkredit, Nordea Kredit and Realkredit Danmark finished the latest round of sales to refinance ARM bonds last Friday (29 November), with analysts noting that spreads were the lowest since before the crisis and that Nordea achieved the lowest absolute yield ever at an auction.

Fears are mounting that covered bonds could fail to secure a position as Level 1 LCR assets after it emerged that the EBA’s Board of Supervisors is against such a recommendation. However, the ECBC and others have said that Level 1 inclusion remains a real possibility.

Nykredit Bank sold a Eu500m two-and-a-half year floating rate senior unsecured issue yesterday (Wednesday) to refinance a bond of the same size maturing in January, according to an official at the issuer, with recent FRN deals also encouraging the move.

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.

Nykredit Realkredit priced its second euro senior secured deal of the year on Tuesday, a Eu500m long five year that an official at the issuer said went well, drawing more than Eu800m of demand and performing after pricing.

Bonds to refinance ARMs have been sold at record low yields and spreads since the latest Danish auction season began on Monday, with this being attributed to lower supply and planned changes to ARMs — even though these were postponed by three months.

Danske Bank is exploring investor interest in Tier 2 debt in the three Nordic currencies and depending on feedback could launch a deal, which would be its second Tier 2 issuance this year, after a September deal in euros.

The Danish government yesterday (Wednesday) moved decisively to address concerns about refinancing risks in its mortgage system by announcing that from 1 January many covered bonds, including those related to ARMs, will face forced extension in certain stressed scenarios.

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.