BRFkredit made its first large sale of covered bonds bonds today (Wednesday) as part of a joint funding arrangement with Jyske Bank and Sydbank, issuing an aggregate Dkr3bn (Eu404m) of 30 and five year paper.

The arrangement, whereby Jyske and Sydbank home loans (prioritetslån) are transferred into BRFkredit’s capital centre E for funding, was announced in February, with Arbejdernes Landsbank also saying it was planning to participate in the joint funding concept.

Jyske and Sydbank had attained approval from the Danish FSA to transfer new loans under the arrangement and, according to an announcement from BRFkredit today, in the second quarter the banks received permission for the transfer of specific portfolios of older bank loans.

“Based on these permissions, BRFkredit has in cooperation with each of the banks agreed to a gradual transfer of mortgages and loans,” it said.

According to a spokesperson for BRFkredit, today’s sale of SDOs (særligt dækkede obligationer), which settles on Monday (2 July), is the first large issuance as a result of the arrangement, with only a very small amount having previously been issued, in April. Related transfers of loans and sales will take place quarterly.

BRFkredit said that it had opened a new 30 year Cibor bond to partly finance the new bank loans and that the rest of the financing will still be in a five year bond.

According to the spokesperson, the five year bond was priced at three month Cibor plus 30bp and the 30 year at plus 60bp.