Bas Snijders, director of
What was your funding programme this year and how far have you managed to achieve it?
For this year we have a funding requirement of around Eu6.5bn, a figure that includes refinancing of maturing debt and the financing of the net growth of our assets, primarily residential mortgages in the Netherlands.
To finance this we have used public senior and mortgage backed bond (Hermes) issues, privately placed MTNs, money market funding including CP and fiduciary or Treuhand money out of Switzerland.
So far we have been able to use all these instruments and year-to-date we are well on schedule in terms of the required volume.
What is your debt issuance strategy over the longer term?
We will continue to emphasise diversification of our funding sources in terms of geography, type of investor and type of funding instrument used. We believe there are good opportunities for single-A rated senior debt issues in the Australian market, resulting from a growing pension fund industry.
Furthermore, we feel there is merit in looking more closely at the US for securitisation transactions because the US credit curve for RMBS issues is steeper than in Europe with advantages to be achieved at the shorter end of that curve.
What markets have offered the most attractive funding?
Fiduciary or Treuhand money out of Switzerland continues to be a very attractive source of short term funding for SNS bank. We have been able to establish close relations with Swiss private banks.
For longer term funding, the private MTN market remains our most attractive market, due to its flexibility and attractive pricing.
Are you looking to access any new markets and expand your investor base?
So far our main market for funding has been Europe, and even there we continue to add new markets and investors to our funding base.
For example, for our latest public bond issue - the Eu500m 5.625% due 2012 - Alpha Bank of Greece was part of our syndicate to assist us in tapping into a fast growing Greek investor base.
In addition, we have seen more and more interest from Asia for privately placed MTNs. We believe this is a market where there are good opportunities for SNS.
What are the attractions of the ABS market?
The benefits for SNS to finance part of its mortgage portfolio via the ABS markets are twofold.
Firstly, it enables us to further diversify our funding sources in terms of type of investor and type of instrument.
Secondly, it gives us the opportunity to manage and improve our capitalisation ratio. As SNS does not have a stock exchange listing we cannot issue new shares to strengthen our capital base. Recently we have created access to hybrid tier one capital through a very successful issue aimed at retail customers of SNS bank. Together with securitisation, which frees up regulatory capital, hybrid tier one instruments will remain an important source of capital for SNS to facilitate further growth of our mortgage book.
How do you plan to develop your ABS programme?
Securitisation will remain an integrated part of our funding and capitalisation strategy. We will remain active as an issuer and will continue to look for ways to improve structuring to meet investor demand and to improve efficiency.
We acknowledge that the RMBS markets are still growing and that new investors are entering this triple-A rated 'safe haven' market all the time. This is one of the key issues to create more demand for RMBS paper and in the long run should lead to a further tightening of spreads. Dutch RMBS deals in particular should perform well on the back of no or negligible loan losses on underlying mortgage pools.
How important are roadshows in your debt strategy and investor relations?
We put a lot of time and effort into our investor relations and we roadshow each and every new public senior debt issue and every Dutch RMBS issue under our Hermes programme.
Because of our emphasis on investor relations, analysts, investors and MTN dealers have a clear understanding of SNS as a credit risk. They appreciate that the core of our business, residential mortgages in the Netherlands, is very safe and that SNS has little or no exposure to lending to large corporates, emerging markets or investment banking activities.
Within the single-A rating category investors clearly perceive SNS as one of the safest, because our benchmark bonds have outperformed the market. This has helped us in these turbulent markets, as we have been able to attract substantial amounts of funding at attractive levels.
You launched a new benchmark euro denominated bond this year. Have you considered becoming a more frequent visitor to the public euro market?
We have a number of funding instruments at our disposal and, depending on market conditions, we will decide whether a public issue makes sense. In general, we have built up an SNS credit curve in liquid, benchmark sized fixed rate public issues over the years and we continue to look for opportunities to maintain and expand this credit curve.
We believe investors should be able to switch duration within SNS as a credit when their views on interest rate changes.
SNS bank is a frequent MTN issuer. What advantages does the private market offer?
Private placements offer us a lot of flexibility and considerable cost savings. We aim to be a professional issuer with an open mind for any market request. We are also able to attract funding at very attractive levels in the private market. Structured notes especially offer good value.
Are you planning to make any changes to your MTN programme?
We will update our programme again in the new year. This could include changes to our dealer panel. There are currently no planned changes to the size of our Eu20bn programme, but we may consider a change to include the possibility of issuing Kangaroo bonds.
How do you choose the lead managers for your public issues?
We reward those banks that place SNS paper in the private markets. As the private market is a very attractive market for us in terms of flexibility and cost savings, we want to motivate banks to do well for us there. If they do, they get to pitch for one of our benchmark public senior deals or repeat issues under our Hermes securitsation programme.