Denmark

Demand for ground-breaking covered bonds issued on Wednesday by Deutsche Bank and Danish Ships Finance was adequate but both required hefty premiums — illustrating a higher degree of investor caution than had been expected.

All maturities are open for deals in the euro market, thanks to a widening in benchmark spreads over the past few weeks. SSA issuers are taking advantage of the conditions by issuing in a range of tenors.

Two SSA borrowers have will follow KommuneKredit's lead by issuing green bonds on Wednesday after the Danish agency announced and priced a deal on Tuesday.

Danish Ships Finance, Natixis Pfandbriefbank and Raiffeisen Bank International will keep the primary market busy with deals and roadshows this week. But the main focus will be on the size and spread that Deutsche Bank achieves for its innovative debut structured conditional pass through (CPT) covered bond that will be launched imminently.

Shares in Danish renewable energy firm Ørsted and in Salini Impregilo, the Italian construction company, continued to trade well this week, generating strong returns for block investors.

SEAS-NVE has sold around a quarter of its stake in Ørsted, the Danish renewable energy company that was privatised in 2016, raising Dkr5.33bn (€741m).

Investors staged a protest over pricing in the non-preferred senior bond market this week, causing one transaction to fail and putting two others at risk of falling flat. Comfortable with their returns for 2019 and happy to be able to choose from a glut of new bond offerings, funds have simply been happy to divert their attention elsewhere. Tyler Davies reports.

Danske Bank has made its second visit of the year to the euro tier two market, paying a much tighter spread for a deal that was otherwise identical to its earlier transaction. The Danish issuer has been subject to higher capital requirements in 2019, amid the fallout from a series of high profile money laundering investigations.

Sparebank 1 Boligkreditt (Spabol) took advantage of positive swap yields to issue a well-subscribed €1bn 10 year this week. Danmarks Skibskredit and mBank are likely to follow soon, having each mandated lead managers for covered bond roadshows.

This week's funding scorecard looks at the progress European sovereigns have made in their funding programmes as we approach the end of October.

The European Systemic Risk Board is concerned that covered bonds could be fuelling financial imbalances — a claim that some analysts find tenuous. They do, however, agree that house prices are overvalued, particularly in some Nordic countries where the ESRB has identified a risk of financial contagion.

KommuneKredit’s senior funding and investor relations manager Lasse Vest has left the Danish agency for Danske Bank.