Realkredit Danmark (RD) today (Thursday) kicked off two days of FRN sales ahead of the latest Danish adjustable rate mortgage (ARM) bond refinancing season next week, with five issuers selling some Dkr148bn (Eu19.9bn) across the different instruments as volumes again decline.

According to Danske analysts, the Dkr148bn of supply compares with Dkr245bn of redemptions, resulting in “plenty of excess cash that needs to be reinvested”.

“Hence, we have seen ASW spreads on the non-callables tighten ahead of the auction,” they added. “Given the excess cash there is room for more tightening.”

A funding official at one issuer said the net fall in supply remains key.

“The total amount compared to the last decade is much, much smaller at these auctions, so I expect they won’t have a huge impact on the levels we see,” he added. “The prices we are going to auction at are not going to be that different from what you are seeing in the secondary market right now.”

Another analyst said that three and five year bullets had tightened against swaps more than the very short end in the past fortnight. He added that Danish bonds had in general reflected the global trend of wider yields since Trump’s victory last week, but that this had been primarily in longer maturities, whereas the bulk of the forthcoming supply is in maturities of five years or shorter.

“People are just going to get a little more yield than a couple of weeks ago,” he said. “Most likely we will see more interest in the longer maturities given the pick-up available.”

Danish krone covered bonds meanwhile remain cheaper than euro-denominated issuance taking into account the costs involved for any investors that might consider alternatives, he noted.

Realkredit Danmark’s opening sale this morning was Dkr13.85bn of a July 2021 floating rate note that a banker said was priced at around 50bp over Cita, while BRFkredit was due to offer an FRN afterwards, with Nykredit joining the FRN sales tomorrow (Friday) and notably including a 10 year.

ARMs refinancing’s next week include some Dkr90bn of krone-denominated sales, down from around Dkr160bn a year previously, according to an analyst, with Eu2.22bn of euro-denominated bonds also on offer. DLR Kredit and Nordea Kredit will be joining the other three Danish mortgage credit institutions in the ARMs issuance, while Nykredit and DLR Kredit will also be holding small associated sales in December.