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.

Negative interest rates will squeeze Swedish banks’ margins and reduce their profitability, Moody’s said on Monday, after Sweden’s central bank reduced its repo rate from 0.0% to negative 0.10% on February 12.

A partial waiver from certain CRR requirements proposed by the Swedish FSA to reduce concentration risk would be credit positive for Swedish covered bonds, according to Moody’s, as it would allow programmes to maintain protections against market risks.

The Swedish FSA is implementing a partial waiver from the application of CRR covered bond requirements that could cause concentration risk after the European Banking Authority agreed that a similar move in Denmark is justified.

Swedish house prices could fall in 2015 against a backdrop of stricter amortisation requirements and Europe’s deteriorating economic outlook, but Swedish covered bond ratings would likely prove resilient even if prices fell by 30%, Standard & Poor’s said yesterday (Wednesday).

Swedish FSA proposals that new mortgage loans be amortised down to 50% of a property’s value according to a specified schedule would be credit positive for banks and covered bonds, according to Moody’s, but an industry representative suggested that implementation will be difficult.

SEB reopened the AT1 market on Thursday of last week (6 November), pricing a debut $1.1bn (Eu883m, Skr8.17bn) perpetual non-call 5.5 issue with a coupon of 5.75% in the first European bank AT1 supply since a deal for fellow Swede Nordea on 17 September.

Skandinaviska Enskilda Banken (SEB) is expected to launch its first Additional Tier 1 (AT1) issue shortly, in the US dollar market, after having begun a roadshow on Monday.

Standard & Poor’s said on Tuesday that a Swedish Bankers’ Association proposal to suggest a reduction in the required level of amortisation to a 50% LTV ratio could help reduce asset-liability mismatch (ALMM) risk in covered bond programmes, but highlighted that issuers have already reduced this since 2008 by extending the duration of their funding.

Amortisation of new mortgage loans down to 50% of a property’s value in line with a Swedish Bankers’ Association recommendation on Tuesday of last week (7 October) would be beneficial, according to Moody’s, while an analyst suggested it could head off further binding measures from Sweden’s authorities.