In 2007, Danish legislation was amended to allow banks to issue covered bonds directly on their balance sheets. In November 2007 the Danish FSA licensed Danske Bank to issue covered bonds. The legislation introduced flexibility, but it is still very strict compared with other covered bond frameworks. In late 2007, Danske Bank launched a programme to issue covered bonds in accordance with new legislation and its license. The Bank intends to issue all its covered bonds under this programme (except for bonds issued by Realkredit Danmark, the Group's mortgage finance arm).
Covered bonds issued under the programme are backed by loans granted by the Danske Bank Group and secured on property. They are currently issued from either Cover Pool D (Domestic) or Cover Pool I (International). Real estate on which the bonds are secured may be located in Denmark (Category D) or in Norway, Sweden, Finland or Ireland (Category I).
Since April 2008, Cover Pool I has consisted only of mortgages established in Norway. The Group expects to include mortgages established in Sweden in the fourth quarter of 2008 and mortgages established in Finland in the first quarter of 2009. Mortgages established in Ireland will be included in Cover Pool I in accordance with market trends but are not expected to be included until 2012.
The first covered bonds were issued from Cover Pool D on December 18, 2007.
The programme gives the Group an opportunity to diversify its funding.
Depending on market conditions, the covered bonds will have medium- to long-term maturity and will thus strengthen the Group's long-term funding. The Bank plans to prepare a euro covered bond benchmark curve on the basis of market conditions.
See additional information about Danske Bank's covered bonds.
Last updated on April 22, 2008