Nordics

Realkredit Danmark began its March auctions on Monday, offering one year bonds in Danish kroner and euros. The borrower is optimistic after strong auction results from other Danish banks in recent weeks, and reported yields of below 1% from its first day of sales.

A Norwegian issuer – believed to be DnB Nor Boligkreditt is considering a 10 year trade, but is struggling to offer an attractive coupon in such a low yield environment, syndicate officials said on Wednesday. Though real money accounts are long cash and eager to put money to work, they may have to move down the credit curve to hit their targets.

The Norwegian Covered Bond Council is trail blazing the Covered Bond Investor Council’s transparency initiative with a data template that sets a great example. Not only does it go well beyond the initial wish list, it also provides additional collateral pool information that until now had not been published by Norwegian issuers.

The performance of cover pools has deteriorated, Crédit Agricole research has found after examining Moody’s, Standard & Poor’s and Fitch’s data. But this is not because of worsening credit risk but rather because of market risk.

Iceland’s Arion Bank sold Ikr2.5bn (€15m) in its first covered bond auction since the issuer was created from the Icelandic arm of Kaupthing Bank in 2009.

Nykredit will begin the first Danish auction of 2012 later this month, selling an estimated Dkr115bn (€15.4bn) between February 27 and March 12. The traditional one year adjustable rate mortgage bonds will make up the bulk of the auction, though with the low yield environment borrowers have moved along the curve.

For the first time in Denmark, non-affiliated institutions will pool their mortgage loans to issue covered bonds.

Sparebanken Vest Boligkreditt (SVB) uncovered €1.6bn of demand in one hour and priced the tightest Norwegian deal this year on Tuesday. Meanwhile, Erste Bank is looking to issue a new 10-year.

Issuers could hardly hope for a better backdrop to bring benchmark deals. Bond yields are falling and investors are looking to put cash to work across a swathe of asset classes to capitalise on the rally, as seen most emphatically in the senior unsecured market this week. Yet Norway’s Sparebank Vest Boligkreditt remains the only obvious candidate for a deal next week.

Sparebank 1 Boligkreddit convinced over 110 accounts to participate in the first publically syndicated seven year covered bond in almost six months.

Sparebank 1 Boligkreditt priced a €1.25bn seven year trade on Tuesday at the tight end of guidance, taking year to date Norwegian supply to over €4bn.

As eurozone issuers slip into blackout, Australian, Nordic and Canadian names have taken over primary market supply. Westpac is planning trades in euros and Australian dollars, while Sparebank 1 Boligkreditt began taking indications of interest on a seven year trade this Monday morning.