Nordics

Moody’s yesterday (Thursday) downgraded DLR Kredit’s issuer rating from A1 to A3 under the rating agency’s new methodology for rating financial institutions that specialise in issuing covered bonds on behalf of an owner bank or a group of banks.

Norges Bank is planning to reverse temporary changes to its collateral requirements and tighten them beyond those that existed before they were eased, it announced today (Thursday). From February 2012 the Norwegian central bank will no longer accept bank securities as collateral, but covered bonds will remain eligible.

A proposed amendment to Sweden’s covered bond law that sets out the options available to an administrator to obtain liquidity in the event of an issuer’s insolvency is a positive addition to the law, but will not, on its own, lead to an improved liquidity gap assessment under Fitch’s methodology, the rating agency said yesterday (Monday).

Danske Bank yesterday (Wednesday) issued a Nkr800m (Eu95m) fixed rate note to complete its Norwegian krone follow-up to a Eu1.25bn six year euro benchmark it sold last Wednesday.

Danske Bank on Friday issued a Nkr1.5bn (Eu178m) five year floating rate note as a follow-up to a euro benchmark priced on Wednesday.

Danske Bank priced a Eu1.25bn six year covered bond in the middle of guidance of the 45bp over area yesterday (Wednesday). A tighter trade would have been possible, said a syndicate official at one of the leads, but with a slightly weaker tone to the market the leads did not want to jeopardise the issue’s chances of performing in the secondary market.

A Eu1bn five year cédulas hipotecarias for Banco Bilbao Vizcaya Argentaria priced at the wide end of guidance could signal a welcome leveling of the balance of power between investors and issuers in the covered bond market, according to one banker this (Wednesday) morning. Meanwhile Danske is in the market with a new issue, National Bank of Greece has completed the first Greek benchmark, and we include here a wrap-up of some distribution statistics from earlier in the week. [Updated to correct BBVA pricing.]

Danske Bank has mandated BNP Paribas, HSBC and UniCredit to manage a new issue alongside itself. The banks are in discussion with clients about a potential six year transaction, said a syndicate official at one of the leads.

UBS made an impressive debut in the covered bond market this (Monday) morning, gathering over Eu7bn of orders. Unicaja also got off to a strong start in the asset class with its inaugural issue, while Swedbank Mortgage will price a larger than expected deal, even if bookbuilding was the slowest of the morning’s deals.

Covered bonds made a comeback in the Swiss franc market this week, as investors reached for a highly rated asset class that, unlike other triple-A product, still offers a spread above mid-swaps.

Stadshypotek yesterday (Thursday) priced a Eu1.5bn five year covered bond, the first new issue launched since the European Central Bank’s purchase programme started that is not eligible for the scheme. But the issuer’s strong credit and cover pool gave it confidence that this would not be a worry for the transaction, it told The Cover. And the Swedish deal already has a successor, with Swedbank Mortgage lined up to launch a seven year issue early next week.

In this roundtable discussion, sponsored by Danske Bank and Nykredit, leading market participants – including issuers, investors and the Danish central bank – examine how Denmark has coped through the crisis and what the future holds for the country’s covered bond market.