Nordics

The Association of Danish Mortgage Banks is exploring the possibility of specialist mortgage banks being allowed to meet the Capital Requirements Directive’s requirement for continuous loan-to-value (LTV) compliance by providing guarantees for the portions of loans that exceed relevant LTV limits, a measure that is currently only available to the country’s universal banks.

The Norwegian Covered Bond Council, which was established in January, aims to enhance Norwegian covered bonds and promote them to domestic and foreign investors, according to Norwegian market participants.

Norway’s KLP group is finalising a public sector covered bond programme for its KLP Kommunekreditt public sector lending business.

Austria’s Bank für Arbeit und Wirtschaft (Bawag) and Norway’s Sparebanken Vest Boligkreditt today (Wednesday) announced that they will go on covered bond roadshows in the week of 17 May, although because of market volatility the new issue market remains closed.

New Finnish covered bond legislation due in July could make indirect issuance an option for smaller institutions, according to market participants, and will do away with legal distinctions between mortgage-backed and public sector-backed issuance. (This follows up on an article from Monday.)

Denmark’s mortgage banks, central bank and financial supervisory authority have said that new liquidity rules proposed by the Basel Committee on Banking Supervision and the European Commission pose a serious threat to the Danish mortgage credit system and wider economy and would destroy the country’s model of adjustable rate mortgage (ARM) lending.

The introduction of a new Finnish covered bond law, expected for July, should not affect the issuance strategies of the country’s two issuers, but could result in at least one new institution entering the market.

Standard & Poor’s removed 10 covered bond programmes from review after affirming their ratings at AAA on Friday, but downgraded five programmes and these remain on review. The actions were taken on the last day of a four month period by the end of which S&P said it aimed to have resolved all 98 ratings it placed on review in December after introducing a new methodology.

DnB Nor Boligkreditt yesterday (Monday) sold the biggest five year benchmark of the year, while a Eu1bn 10 year BNP Paribas Home Loan issue attracted yield-oriented demand in a well supported covered bond market.

Three issuers this (Monday) morning launched or tapped benchmark covered bonds in a market buoyed by an agreement over the weekend on terms of an emergency loans package for Greece. Meanwhile, Dexia Municipal Agency has mandated for a deal that could be launched tomorrow (Tuesday).

With more than Eu4bn of benchmark issuance priced yesterday (Wednesday), there were no signs of the covered bond market slowing down after a record first quarter. And pricing at the tight end of guidance for three new benchmarks showed spreads holding up under the heavy supply.

Compagnie de Financement Foncier priced a Eu1bn five year covered bond this (Thursday) morning, while DnB Nor Boligkreditt has announced a mandate for a deal that market participants expect to be launched next week.