Nordics

Sparebank 1 Boligkreditt struggled to get investor traction on Tuesday morning for its €1bn long six year benchmark. The weak demand was in sharp contrast to last week’s €1.5bn five year bond from DNB Boligkreditt, with bankers away from the deal suggesting the long six year maturity may have been slightly too long for asset managers looking to shorten duration.

Swedish finance minister, Anders Borg’s call for the country’s banks to reduce their reliance on covered bonds to fund mortgages has not won support among bankers, who questioned the need to tinker with a funding mix that has served Swedish banks so well.

After a spate of seven year deals from Scandinavian banks, Norway’s DNB Boligkreditt was set to price a €1.5bn five year on Tuesday. This will sit well with investors’ year-end liquidity constraints, said bankers.

The new Norwegian government’s pre-election pledge to ease mortgage lending standards would be credit negative, Moody’s said on Monday. Norwegian households are already highly indebted, house prices are overvalued and inflating the credit bubble further could result in a failure to repay high LTV mortgage loans under stressed market conditions, it said.

SEB returned to the covered bond market on Monday to issue its second seven year euro benchmark of the year and the second from a Swedish bank in less than a week. Though SEB was unable to match the cheap funding in Stadshypotek’s recent deal, it was placed with more real money investors.

Nordea’s decision to revive traditional callable bonds reduces refinancing risk and strengthens cover pool quality, Moody’s said on Wednesday.

After emerging from blackout on Tuesday, Stadshypotek returned to the covered bond market on Wednesday, mandating joint leads for a euro benchmark. Despite pricing at the tightest seven year Scandinavian deal since 2006, the borrower attracted robust demand, in an exercise that, once again, highlighted just how undersupplied the covered bond market has become.

Norway’s banks will not be hit by the finance ministry’s latest changes to balance sheets rules that affect mortgages, as they already operate on a stricter footing, a local banker told The Cover on Tuesday. From next January the loss given default floor for mortgage assets on Norwegian bank balance sheets will double, the finance ministry announced on Sunday.

Moody's has given a triple-A rating to the Norwegian mortgage covered bonds issued by Sweden’s Skandiabanken, which has an A3 issuer credit rating.

The European Banking Authority (EBA) on Monday published the final draft of its Regulatory Technical Standards (RTS) on close correspondence between the fair value of an institution's covered bonds and the fair value of its assets. The document will put an end to an accounting trick that allowed banks to make their capital position appear better than it was.

Sweden’s central bank highlighted the refinancing risk between the duration of assets and covered bond liabilities in a financial stability report this week. It is also concerned about the high proportion of bonds that banks are holding for liquidity purposes. Analysts welcomed the report and the bank’s pre-emptive and prudent approach.

Sparebanken Vest Boligkreditt (SVB) returned to the covered bond market on Wednesday, after more than 18 months away, issuing a no grow €500m five year that was priced flat to its outstanding curve.