BRFkredit wrapped up its refinancing sales today (Tuesday) by selling one year Danish krone ARM bonds at the same spread as Nykredit, which an analyst said has not happened for several years, while RD spreads were stable and DLR Kredit was pleased with its results so far.

The latest round of auctions to refinance interest-reset bonds, this time with a 1 April payment date, started last on Monday of last week (25 February) via Nykredit Realkredit. Nordea Kredit also held auctions last week, but finished these on Thursday.

DLR Kredit kicked off its auctions yesterday (Monday) with the first of three Danish krone one year bond offerings. The bid-to-cover ratio on yesterday’s Dkr2.7bn (Eu362m) sale was 2.9 and the interest rate 0.34%, with an official at the issuer describing the spread to other Danish issuers’ bonds as a “very strong result”. DLR’s one year bonds came out 2bp wider than Nykredit’s yesterday afternoon, she said.

This morning the issuer held the first of two auctions of euro denominated one year bonds, offering Eu350m and obtaining a bid-to-cover ratio of 1.6 and a 0.45% interest rate. The bank is auctioning Dkr250m of three year bonds this afternoon.

Jan Weber Østergaard, senior analyst at Danske Bank, said that, as expected, there is little spread disparity between the one year Danish krone bonds being auctioned by the different mortgage banks, with DLR Kredit’s coming around 4bp back of Realkredit Danmark’s.

BRFkredit is wrapping up two days of auctions today (Tuesday), having sold Dkr1.2bn of one year Danish krone bonds. The spread difference to Realkredit Danmark has been 3bp while BRFkredit one year bonds were today sold at the same spread as Nykredit’s (25bp over Cita), which Østergaard said has not happened since around 2007.

“Those are pretty tight levels, as was the case in the December auctions,” he said.

Realkredit Danmark (RD) began its sales yesterday and has sold Dkr8.4bn (Eu1.13bn) of one year Danish krone interest reset mortgage bonds over the past two days, at a spread of around 22bp over Cita.

Søren Gravgaard, senior dealer at Realkredit Danmark, said that this is in line with expectations and a satisfactory outcome so far.

“Yesterday we were looking for between 22bp-24bp over,” he said, “and we came out just above 22bp and today it’s around 22bp over.

“We followed the auctions last week, when Nykredit and Nordea were auctioning, and from their levels we guessed that we would come somewhere in between, and that is what happened.”

The bid-to-cover ratio in Realkredit Danmark’s auctions dropped from 3.01 yesterday to 2.20 today (Tuesday), with Gravgaard noting that the most recent level of demand is not that satisfactory, and could be due to overall market conditions, with investors switching out of bonds and into stocks.

“I think that’s why the interest is lower today,” he said.

Pricing has been quite stable over the course of the auctions, said Danske’s Østergaard, with spreads almost in line with market levels that had tightened in the lead-up to the auctions.

Spreads on one year ARM bonds widened a little bit, however, he added, mostly on Nykredit Realkredit bonds.

“It’s the largest issuer at the auctions and the bid-to-covers have been pretty low over the past couple of days,” he said, “and spreads are around 4bp wider.”

Nykredit one year Danish krone ARM bonds were sold at around 20bp over Cita at the beginning of the issuer’s auctions, with a Dkr8bn offering yesterday coming at 24.4bp over and Dkr8.2bn at 25bp over today. Its three year Danish krone ARM bonds tightened by around 1bp compared with yesterday.

The first sizeable amount of five year bonds in this season’s auctions was offered by Nykredit yesterday, with a further sale today, noted Østergaard. Nordea auctioned some five year bonds last week, but this was for a small amount compared with relatively high aggregate volumes of around Dkr21bn of five year bonds on offer as borrowers take out longer refinancing periods.

Nykredit auctioned Dkr2.3bn of bonds with a 1 April 2018 interest reset date over the past two days, around 26% of a total announced offering of Dkr8.78bn.

The bid-to-cover ratio was 2.12 yesterday, falling to 1.83 today. Østergaard said that spreads have been in line with market levels, but were around 2bp wider than yesterday, when the spread was 27bp over three month swaps.