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 amended Danish legislation introduces flexibility, but is still very strict compared with other covered bond frameworks. In late 2007, Danske Bank introduced a covered bond programme to be able to issue covered bonds in accordance with Danish legislation and the Bank’s covered bond license. Danske Bank intends to issue all its covered bonds under this programme (except for bonds issued by Realkredit Danmark, the mortgage finance arm of the Danske Bank Group).
Covered bonds issued under the programme are backed by loans granted by the Danske Bank Group and secured on property. The covered bonds are currently issued from either Cover Pool D (Domestic) or Cover Pool I (International). Mortgage real estate on which the covered bonds issued under the programme are secured may be located in Denmark in the case of Category D covered bonds, or in Norway, Sweden, Finland or Ireland in the case of Category I covered bonds.
As of April 2008, Cover Pool I includes only mortgages established in Norway. Mortgages established in Sweden are expected to be included in Cover Pool I in the fourth quarter of 2008, and mortgages established in Finland are expected to be included in the first quarter of 2009. Mortgages established in Ireland will be included in Cover Pool I in accordance with market trends, but are currently not expected to be included until 2012.
The first covered bonds were issued under this programme on 18 December 2007 from Cover Pool D.
The programme will provide Danske Bank with a diversification opportunity in terms of funding.
Depending on market conditions, covered bonds issued by Danske Bank will have medium- to long-term maturity and will thus strengthen the Group's long-term funding. It is the intention of Danske Bank to prepare a euro covered bond benchmark curve based on market conditions.
Last updated on April 22, 2008