Nordics

Denmark’s mortgage banks have sold a record volume of mortgage bonds during the country’s traditional end-of-year auctions that are held to refinance variable rate mortgages. But very high bid-to-cover ratios suggest the large supply was easily absorbed.

Swedbank is guaranteeing covered bonds issued by Swedbank Mortgage as part of a “general, unconditional and irrevocable” guarantee of the issuer to maintain the mortgage bank’s A2 rating from Moody’s, which was affirmed today (Friday).

Standard & Poor’s today (Friday) downgraded DnB Nor’s long term counterparty credit rating from AA- to A+, on stable outlook, because of “sharply” deteriorating asset quality this year.

Terra Boligkreditt has sold a Nkr1bn (Eu118m) 10 year covered bond after a rise in yields enabled the issuer to offer a 5% coupon attractive to investors.

Two new Norwegian mortgage institutions have issued covered bonds backed solely by commercial mortgages, The Cover understands.

Norges Bank and Moody’s this week mentioned the positive effects the growth in covered bond funding is having in Norway, but also noted possible negative side-effects of the trend.

Danmarks Nationalbank will accept junior covered bonds as collateral for credit on a permanent basis from February 2010, the central bank has announced.

Moody’s yesterday (Monday) downgraded Nykredit Realkredit’s junior covered bonds from Aa2 to Aa3, concluding a review for possible downgrade initiated on 11 September.

A group of small Norwegian banks has set up a mortgage credit institution, Verd Boligkreditt, for the joint issuance of covered bonds. It will be run on their behalf by Sparebanken Vest, which also has its own covered bond vehicle.

SpareBank 1 Boligkreditt priced the first Norwegian jumbo since September 2008 yesterday (Tuesday) afternoon, a Eu1bn three year deal that the issuer told The Cover made good on its commitment to benchmark covered bond issuance every year.

New issues from Spain and Norway launched this (Tuesday) morning after UBS’s second benchmark covered bond yesterday (Monday) are making this week busier than most market participants had been expecting.

Denmark’s mortgage banks will be auctioning around Dkr550bn (Eu73bn) of covered bonds over the course of the industry’s annual December auctions, almost twice the amount sold through the auctions last year. But demand is “huge”, said one analyst familiar with the auctions.