Nordea Mortgage Bank, a new Finnish issuing entity established following a demerger of Nordea Bank Finland, is looking into possibilities in the euro market and could launch its first euro covered bond in the fourth quarter of 2016, according to an official at Nordea.
Nordea today (Friday) launched a consent solicitation in respect of covered bonds issued by Nordea Bank Finland, seeking approval for a new demerged entity, Nordea Hypoteksbank, to assume the role of issuer while the Finnish bank is converted into a branch of the Swedish parent.
Nordea is expected to establish a distinct Finnish covered bond issuer as part of a strategy whereby its Danish, Finnish and Norwegian banking subsidiaries will become branches of the Swedish parent, a move that will be put to the group’s annual general meeting next month.
Nordea Bank Finland reopened the market on Monday alongside Bank of Ireland as euro covered bond supply picked up to reach Eu6bn and seven deals this week on the back of improving appetite from investors.
A move by the Finnish FSA (Finanssivalvonta) to designate Nordea Bank Finland, OP Financial Group, Danske Bank and Municipality Finance as systemically important credit institutions, and therefore impose upon them additional capital requirements, is credit positive for the affected banks, according to Moody’s.
Nordea Bank Finland drew over Eu4.25bn of demand for a dual-tranche, 5.25 and 12 year, deal on Tuesday that, at Eu2bn, is the largest covered bond issue since November and the first dual-tranche benchmark to have both tranches pricing through swaps.
A Eu1bn 10 year Nordea Finland deal on Wednesday that was the first new benchmark eligible for CBPP3 since the programme began met with a “bonkers” response, achieving pricing 5bp inside initial price thoughts and kickstarting the primary market for Eurozone issuers.
Nordea Bank Finland reopened the euro benchmark covered bond market with the first such trade since the end of July on Tuesday, issuing a Eu1.5bn five year transaction, while Sparebanken Vest has announced a euro roadshow mandate.
The outlook for the Finnish banking system remains negative, said Moody’s yesterday (Wednesday), citing as driving factors its expectations of a continued weak operating environment, increasing household indebtedness, and high reliance on wholesale funding in the context of prevailing capital markets volatility.
Nordea Bank Finland placed the first Nordic benchmark covered bond of 2013 on Tuesday, a Eu1.25bn seven year deal that came inside the issuer’s curve after being twice subscribed, with the tight pricing seen as justified by strong technicals and a robust market.