Realkredit Danmark will refinance bonds financing FlexKort®, RD Cibor6® and RD Euribor3® maturing 1 July 2016.
For the auctions new floating rate covered bonds (SDRO) will be issued. The bonds will expectedly be opened in April where the Final terms will be published in an Announcement of prospectus.
The characteristics of the mortgage covered bonds is shown in the appendix to this announcement.
Realkredit Danmark is still unsure of the depth of demand for mortgage covered bonds without an interest rate floor. The decision on whether a bond is to be opened with or without an interest rate floor is based on an overall assessment of what is in the best interest of the customers.
Realkredit Danmark has chosen to open a 4-year mortgage covered bond (SDRO) without an interest rate floor to fund RD Cibor6®. The bond is opened without an interest rate floor in order to meet customer demand. Further, it’s Realkredit Danmark’s assessment that there is sufficient interest by investors for bonds without interest rate floor to meet the need for RD Cibor6® funding. The bond will be used for new loan offers after refinancing.
For the refinancing of FlexKort® a 4-year mortgage covered bond (SDRO) is also opened – but the interest rate floor is maintained. Realkredit Danmark does not assess that the demand in the market for bonds without an interest rate floor is sufficient to ensure an auction result that is in the customers’ best interest. The bond will not be used for new loan offers after refinancing, given the volume. Offers will, for the time being, be offered in DK0009299133.
The mortgage covered bond (SDRO) to fund RD Euribor3® will be a 3-year bond with interest rate floor. The interest rate floor is preserved, since Realkredit Danmark does not believe there is a market for euro-bonds without an interest rate floor. The bond is slightly shorter than the Danish since the Euro market is typically shorter than the Danish. The bond will be used for new loan offers after refinancing.
In the future, Realkredit Danmark will determine whether new bonds will be opened without an interest rate floor when opening the bonds. This will be communicated to the market well in advance of any refinancing.
Details regarding the upcoming auction sizes and organisation hereof will be announced in a separate announcement.
Appendix
The Executive Board
Any additional questions should be addressed to Head of RD Funding, Christian Rosenstand, phone
+45 45 13 20 19.