Realkredit Danmark has decided to establish a new capital centre for the financing of FlexLån® loans in order to be able to continue to issue bonds with the lowest possible coupons and to offer competitive home loans.
Through its new capital centre Realkredit Danmark will issue covered mortgage bonds for the financing of new FlexLån® loans and for the refinancing of existing FlexLån® loans. Realkredit Danmark will seek to achieve the highest possible rating for the new capital centre.
Fixed rate loans and variable rate loans with a rate cap will still be financed through the existing capital centre (Kapitalcenter S).
Realkredit Danmark is the second-largest mortgage finance institution in Denmark, with a loan portfolio of DKK 694 billion. It believes that this step will help make the Danish mortgage finance system more secure in the future and make it more robust against large fluctuations in the economy and in the financial markets.
Termination of collaboration with Moody’s
Realkredit Danmark has decided that it will no longer collaborate with the Moody’s rating agency. The decision was taken because, Moody’s, as a result of its model calculations, demanded that Realkredit Danmark provide an additional excess cover of DKK 32.5 billion if it wanted to keep its current AAA rating.
Realkredit Danmark could provide additional excess cover either through the issue of junior covered bonds or through a loan from Danske Bank. The liquidity position of the Danske Bank Group is strong and absolutely adequate to provide the required excess cover.
Realkredit Danmark has the highest solvency ratio of the Danish mortgage finance institutions (35.9%), and its low loss ratio did not exceed 0.2% at any time during the financial crisis. Consequently, it disagrees with Moody’s view of the Danish mortgage finance sector and its demand for additional coverage in Realkredit Danmark.
Realkredit Danmark has discussed the fundamentals of the matter with Moody’s in order to understand the rationale behind its rating model, but has concluded that the parties disagree about the fundamentals. The approach used by Moody’s differs in material respects from the approach used by other rating agencies.
Realkredit Danmark still holds an AAA rating from Standard & Poor’s and does not expect the termination of its collaboration with Moody’s to affect its business.
Increase in contribution margins
Realkredit Danmark will increase its contribution margins on 1 January 2012. More information will be available later in the year.
Realkredit Danmark’s pricing aims at ensuring the institution’s continued competitiveness and the possibility of financing bond issues at the lowest possible coupons. Different prices will apply to the different loan types.
The Executive Board
For further information, please contact Carsten Nøddebo, CEO, tel. +45 45 13 20 82 or Anders Klinkby, First Vice President, tel. +45 25 10 19 19.