Nordics

A new Danish central securities depositary in Luxembourg has made it possible for Danish mortgage institutions to issue covered bonds that are expected to be eligible as collateral with the European Central Bank and therefore more attractive for investors. Realkredit Danmark is from today (Tuesday) following Nykredit in using the new option.

The Swedish government on Monday announced a rescue package for the country’s financial system, which includes a bank debt guarantee scheme, a stabilisation fund to manage potential solvency problems, and equity injections. However, in contrast to most other European rescue plans, new covered bonds issues are explicitly included in the Swedish guarantee.

In brief: DnB Nor today (Tuesday) detailed its capacity to access the new liquidity measures announced by the Norwegian ministry of finance at the weekend.

Storebrand Kredittforetak on Friday issued the first tranche off a new five and a half year fixed rate covered bond of up to Nkr2bn with a yield of 5.95% per annum. The issue is the Norwegian institution’s fourth under a programme that was established in the spring of this year.

Moody’s has downgraded the covered bonds of Glitnir and Kaupthing from Aa1 and Aaa, respectively, to Ba3. The rating agency has also set the timely payment indicator (TPI) on the two issuers’ covered bonds to “very improbable”.

The Danish government and the Danish financial sector, represented by the Private Contingency Association, yesterday (Wednesday) announced a package to ensure financial stability in the country. The plan guarantees depositors’ and senior unsecured creditors’ claims against banks for two years, but covered bonds are explicitly excluded from the guarantee.

EuroWeek, in partnership with UniCredit, recently held a Nordic roundtable where major issuers discussed their experiences during the past year and how they have coped during the crisis.

Moody’s yesterday (Wednesday) reacted to the Icelandic government’s rescue of Glitnir Bank by downgrading the bank’s covered bond ratings from Aaa to Aa1. The ratings were placed on review for possible further downgrade.

The credit and (il)liquidity crisis struck Europe with a vengeance today (Monday), as the UK government took over Bradford & Bingley’s loan books and wholesale liabilities, Fortis was part nationalised by the Benelux governments, and Hypo Real Estate was forced to turn to the German government for funding.

Riksbank, the Swedish central bank, has responded to the market turmoil by increasing the amount of covered bonds from a counterparty or an institution with “close links” to it that can be used as collateral in the RIX payment system, it announced today (Monday).

In brief: Pfandbriefbank schweizerischer Hypothekarinstitute found demand focused at the short end when it came to market with a Sfr340m dual tranche bond this week.

Sparebank 1 Boligkreditt and the Swedish Covered Bond Corp showed the new realities of the covered bond market this week, taking spreads to new wides to win over investors. The Cover spoke to officials at the two institutions about the thinking behind their new issues.