Stadshypotek could issue an inaugural Danish krone covered bond from a new Danish krone cover pool if market conditions are favourable, according to a treasury official at the Swedish issuer’s parent, after it set up a test Dkr5.5bn pool to obtain a provisional rating.

As previously reported, Stadshypotek received a provisional Aaa rating in a Moody’s pre-sale report on Monday for covered bonds to be issued out of a Danish cover pool. The cover pool used in Moody’s analysis totalled Dkr5.5bn against Dkr5bn of covered bonds outstanding, all Danish krone-denominated.

“Since Moody’s only issues a definitive rating once a bond has been issued, we have set up a test pool that mirrors a potential pool, in order to get a provisional rating before any issuance,” Charlotte Norder, vice president, central treasury at Svenska Handelsbanken told The CBR. “So at present, there are no bonds outstanding and consequently no definite pool set up.

“If and when Stadshypotek would issue a Danish krone covered bond, a pool will be set up and a definitive rating from Moody’s will be obtained.”

Norder said a Danish krone covered bond issue could follow “if market conditions are favourable”. The issuer cannot yet comment on the potential timing of any transaction, she said, and any transaction could take the form of a public issuance or private placement.

The cover pool will be the Svenska Handelsbanken subsidiary’s fourth, alongside existing cover pools containing Swedish, Norwegian and Finnish assets, respectively. The three existing pools have been set up under Swedish covered bond legislation – as will the Danish pool.

“Stadshypotek has branches in Norway, Finland and Denmark and consequently lending in the respective currencies,” said Norder. “The intention is to have part of the funding of the assets in the currency of the assets – euros for Finland, Norwegian kroner for Norway and potentially Danish kroner for Denmark.

“The Swedish pool is the largest and all assets are in Swedish kronor, but approximately 20% of the funding is non-Swedish krona – euros, US dollars, sterling, etc.”

Stadshypotek inaugurated its Eu5bn Finnish cover pool with a Eu500m 10 year issue in September 2016, and has since issued a Eu500m seven year in February and a Eu500m 10 year on 24 October. It has also issued one non-domestic benchmark from its Swedish pool this year, a $1.25bn five year in March.