Denmark

Though the covered market was quiet on Friday, market participants can look back on highly successful week in which almost Eu7bn in euro benchmarks was issued. After faltering supply in April UniCredit analysts report that covered bonds are on track for another record month. Issuance thus far in May is almost Eu20bn, less than Eu2bn short of the record total supply for that month.

After two weeks without benchmark issuance market participants are looking past the UK royal wedding and May Day holiday to a resumption of primary market activity on Tuesday. Syndicate officials were modest in their expectations however as, with peripheral markets effectively closed and some core names in blackout, prospective issuance from for core jurisdictions appears sparse.

Recent hawkish comment’s from the ECB president Jean Claude Trichet have helped to boost demand in the Danish covered bond auctions, which entered their second day today.

German 10-year Bunds are correcting slightly higher this (Friday) morning, but a long term trend of rising yields that has been in place since August remains intact. As a result, real money accounts are increasingly hitting their target returns –a driving factor behind a hugely upsized increase of a tap for Caisse de Refinancement de l’Habitat.

A final Nykredit auction on Monday concluded end-of-year auctions of interest-reset mortgage bonds held by Denmark’s mortgage credit institutions for this year. Investor interest was lower than last year, but borrowers look set to benefit from mortgage rates that will be reset to low levels compared with previous years, according to Danske Bank analysts.

Traditional end-of-year auctions held by Denmark’s mortgage lenders kicked off yesterday (Thursday), with around Dkr537bn (Eu72bn) of interest-reset mortgage bonds lined up for refinancing. Surplus liquidity is expected to contribute to the large volumes being well absorbed despite difficult wider market conditions.

Sampo Housing Loan Bank is preparing to resume issuing covered bonds for the first time since being acquired by Danske Bank in 2006 as part of a takeover of its parent, Sampo Bank, an official at Dankse told The Cover.

Concrete plans for new issue projects next week appeared thin on the ground this (Friday) morning, but this could be a misleading indicator of forthcoming supply. At least three issuers are on the road next week, Spanish banks are emerging from blackout periods, and bankers said that French issuers are likely to be encouraged by a successful Compagnie de Financement Foncier Eu1bn 10 year transaction sold yesterday.

Cato Baldvinsson, who has been head of group treasury at Danske Bank, will be retiring next July, and a new head has been appointed.

Denmark’s Nykredit Realkredit priced a Eu500m long three year junior covered bond on Friday and the issuer told The Cover that it was pleased with foreign investors’ response to its inaugural euro offering of what represented “senior debt with a twist”.

Supply of sizeable euro covered bonds was this week at its lowest since the benchmark market reopened at the end of August, but activity is expected to pick up again next week, with issuers also said to be preparing for issuance in dollars and niche currencies. Meanwhile, Denmark’s Nykredit Realkredit today (Friday) launched an inaugural euro junior covered bond transaction.

Standard & Poor’s, under its revised covered bond rating methodology, on Friday affirmed at AAA and removed from negative review mortgage bonds and covered bonds issued by Realkredit Danmark. Six programmes remain on review under S&P’s updated methodology.