Yields on Danish covered bonds being auctioned to refinance adjustable rate mortgages (ARMs) fell through the week from their first sales on Monday to as low as 0.13% yesterday (Thursday), while smaller issuers achieved good results versus their larger peers.

The yield on Nykredit Realkredit one year ARMs – of which the lender sold Dkr6bn daily – dropped from 0.19% to 0.13% from Monday to Thursday, for example, although bid-to-covers also declined, with Nykredit’s and also Realkredit Danmark’s coverage falling from 3.38 to 2.61 times and 3.83 to 2.25 times, respectively. The yield moved back up to 0.15% today (Friday).

Lars Mossing Madsen, chief dealer at Nykredit Realkredit, said that although the lower levels reflected a tightening versus swaps, the fall in yields mainly reflected an outperformance of Denmark versus the euro-zone.

“We still see huge interest,” he added, “and it looks like we can give our borrowers extremely low yields.”

Collectively, BRFkredit, DLR Kredit, Nordea Kredit, Nykredit Realkredit and RD have announced plans for Dkr177bn of one year ARMs sales between the start of sales this Monday and their close next Friday (29 November).

DLR Kredit sold Dkr16.8bn of one year ARMs bonds from Monday to Wednesday and achieved an estimated spread to Nykredit’s of just 0.02bp-0.03bp, according to the issuer. The result came as the issuer moved its sales to the beginning of the auction season, having previously felt that it had encountered weaker demand as a result of coming after its peers.

BRFkredit began selling Dkr25.1bn of one year ARMs bonds on Monday until the end of next week. Anders Lund Hansen, group treasurer at BRFkredit, on Tuesday said that the issuer’s first day of sales went well.

“There were no hiccups,” he told The Covered Bond Report. “There are still nine days left so it is a bit too early to cheer, but yesterday there was solid demand and we are pleased with the spread versus our peers.”

Demand for liquid assets should support the auctions, he added.

Nordea Kredit begins its auctions on Monday.