Danske Bank said it does not expect to issue publically out of a cover pool ‘R’ backed solely by Irish residential mortgages that it launched late in the third quarter.

When the Danish bank first launched its covered bond programme in late 2007, it had two cover pools, a Danish residential mortgage backed domestic pool (D-pool) and an I-pool intended to be backed by international mortgages from Sweden, Norway and Ireland. Danske operates through National Irish Bank in the Republic of Ireland.

Danske Bank senior vice president Peter Holm told The Covered Bond Report that when the bank launched its first issue out of the I-pool, the Irish market had worsened and the bank decided not to include Irish assets in the I-pool.

“Our intention was that cover pool ‘I’ should have included Irish assets, but that went wrong because of the Irish market,” said Holm.

But late this year the bank decided to include the Irish residential mortgages in a separate pool, cover pool R.

The issuer retained a Eu1.5bn three year floating rate note issued out of cover pool R in September. It listed the bond, based on three months Euribor, on the Irish stock exchange.

“The only purpose for us is to keep our balance sheet liquid,” said Holm. “Therefore the bonds operate as a liquidity buffer.”

The covered bonds are not rated.