Nordics

Activity in the euro government guaranteed bank debt market has picked up since Monday’s Swedbank issue, but only moderately. And despite an improvement in market sentiment, covered bond banks are keeping investors waiting for a follow-up to last week’s jumbo from Crédit Agricole.

The government guaranteed bank debt market was the juncture of two waves of negative sentiment in the markets this week, as downgrades hit the sovereign market and financial institutions suffered renewed pressure.

As part of a second aid package for Danish banks, the Danish government has extended guarantees to junior covered bonds in a move aimed at protecting the outstanding covered bonds of Danish mortgage institutions.

Bayerische Landesbank and Danske Bank have priced their first government-backed senior unsecured issues on the back of larger order books and the next deals from Germany and Denmark are said to have been mandated for launch soon.

Danske Bank launched the first government-guaranteed deal for a Danish bank this (Wednesday) morning. Bayerische Landesbank opened books on a SoFFin-backed deal, while unguaranteed senior supply has reached new areas.

Euro denominated mortgage bonds issued by Danish covered bond institutions through a new Luxembourg-based central securities depositary have been approved as collateral for loans with the European Central Bank.

Danish covered bond issuers have completed the December auctions of their covered bonds. Dkr300bn (Eu40.3bn) of Danish krone bonds and Eu9bn of euro denominated bonds were sold to investors.

Swedish issuers have told The Cover that it is unlikely they will be making use of the government guarantees available to them for covered bonds. While the costs of such issuance may be interesting relative to guaranteed senior unsecured issuance, other considerations work against it.

The Finnish government will apply the same methodology as Sweden to determine the individual fees banks will have to pay to make use of the guarantee scheme for covered bonds.

The Swedish National Debt Office yesterday (Tuesday) announced the bank-specific fees for use of the state guarantee for covered bonds. All charges for the guarantee programme have now been set.

Investor appetite for covered bonds sold so far at Danish mortgage banks’ December auctions is as healthy as it has been in previous years, according to market participants, putting to rest fears that difficult market conditions would deter investors from participating in the auctions.

Rating news: The Swedish Covered Bond Corp must take certain remedy actions set out in the documentation of its covered bond programme to mitigate the downgrade of its parent’s ratings by Standard & Poor’s last Wednesday, the agency said today (Monday).