Nordics

Tight valuations in euros are making it difficult for banks to impress investors with new senior trades. Issuers may have to pay up or switch focus to other asset classes to make the most of the January market.

DNB Boligkreditt issued a covered bond on Thursday that became its most oversubscribed covered bond ever, equalling the bank’s biggest ever order book. The deal, secured on green mortgages, was priced through its vanilla curve, clearly demonstrating the demand for covered bonds.

Finland’s Municipality Finance has had a busy week in the Norwegian krone market, as demand from domestic bank treasuries for high quality liquid assets (HQLA) drove a pair of floating rate notes in the currency.

After issuing the first green covered bond, Sparebank 1 Boligkreditt has now become the first bank outside the UK to undertake a Sonia consent solicitation. The consent solicitation will increase pressure on other issuers outside the UK to follow suit.

KfW and Swedish Export Credit Corporation (SEK) achieved strong results in sterling on Tuesday despite extremely volatile conditions in the currency as a result of uncertainty around the impact of Brexit and the rising cases of coronavirus in the UK, which has affected swap spreads and the cross-currency basis swap for non-UK borrowers.

Expected euro denominated covered bond supply from the Nordic region looks promising with Norway likely to prove a particularly bright spot. However, more cost-effective domestic funding in the Swedish market is expected to depress euro volumes there.

The Finnish financial sector wants to put the brakes on new measures aimed at completing the Banking Union, arguing that EU member states should move back into a clearly defined process of risk reduction.

Norwegian banks are unsure how to press on with their minimum requirements for own funds and eligible liabilities (MREL). The Financial Supervisory Authority of Norway (NFSA) is asking them to meet their targets with subordinated liabilities only, but there is a chance the country will implement a softer set of EU rules next year.

Kommuninvest, the Swedish local government funding agency, is hoping to issue its much delayed debut green bond in euros next year after initial plans to bring the deal this year were put on hold.

This week's scorecard looks at the progress Nordic agencies have made in their 2020 funding programmes in mid-December, with some issuers also setting their targets for 2021.

A busy December for Nordic equity capital markets continued on Tuesday night with a Nkr2bn ($230m) transaction in Adevinta, the e-commerce and classified advertising company owned by Schibsted Media Group.

Kommunalbanken, the Norwegian funding agency for local governments, is reducing its 2021 funding programme.