Moody’s noted that the soft bullet mechanism used by SCBC for the first time on a Eu1bn covered bond launched on Tuesday of last week (30 September) reduces fire-sale risk associated with covered bonds in the event of default, which is the major driver of cover pool losses.
ESMA released final draft RTS on central clearing requirements for OTC derivatives on Wednesday of last week (1 October) that featured several concessions to the covered bond industry, but the regulator did not make all the requested changes and related changes to Norwegian and Swedish laws are now in store.
SCBC sold its first euro benchmark in three and a half years on Tuesday, a Eu1bn (Skr9.1bn) seven year that is understood to be the first soft bullet covered bond out of Sweden, and an official at the issuer said it will now be returning to the euro-denominated market on a yearly basis.
Nordea achieved the lowest coupon on an Additional Tier 1 (AT1) with the first such issue from Sweden on Tuesday, a $1.5bn (Eu1.16bn, Skr10.7bn) transaction split into two tranches that included a $1bn perpetual non-call five tranche paying 5.5%.
Nordea is set to launch the first Additional Tier 1 (AT1) instrument from Sweden next week, having embarked upon investor meetings for what will be a high, 8% trigger temporary write-down structure.
Ålandsbanken is aiming to increase the share of covered bonds in its funding profile, according to an official at the issuer, as it prepares to go on a roadshow linked to plans for a euro deal backed by its cover pool of Finnish residential mortgages.
Danske Bank sold a Skr5bn (Eu546m, Dkr4.08bn) April 2018 floating rate covered bond backed by Swedish and Norwegian residential and commercial mortgages yesterday (Wednesday), which was the Danish bank’s first covered bond issue in Swedish kronor in more than two years.
The Swedish FSA announced details of tighter capital requirements today (Thursday), which market participants said provide welcome but only partial clarification of the capital regime in Sweden, with outstanding questions about Pillar 2 requirements obscuring the outlook for AT1 supply.
The Swedish Bankers’ Association has called for liquidity assistance by central banks to be included in reporting of encumbered and unencumbered assets in a response to a European Banking Authority (EBA) consultation that finished last Thursday (20 March).
Stadshypotek priced a Eu1.25bn five year covered bond on Monday, the joint tightest post-crisis non-German Pfandbrief euro benchmark covered bond, with an official at the issuer noting that the prevailing euro market provided a “unique” funding opportunity for Scandinavian issuers.