Terms for Nykredit's and Totalkredit's Auctions
To Nasdaq Copenhagen
Overview of Auction Procedures
The bond offering associated with the adjustment of interest rates on adjustable-rate mortgages (ARMs) and the refinancing of floating-rate loans at Nykredit and Totalkredit's auctions amounts to approximately DKK 43.1 billion. The auctions are scheduled to occur from the 17th to the 20th of November.
Publication of Offered Amounts
During the auction period, Nykredit Realkredit A/S will publish daily updates regarding the amounts being offered for individual ISINs on their official site. This transparency allows for real-time tracking of offered amounts, facilitating informed bid decisions.
Details of Auction Terms
The terms for the auctions encompass a comprehensive list of available bonds, the respective amounts, and a detailed auction schedule. Comprehensive information regarding these offerings is provided in specified appendices that clients can refer to for clarity.
Daily updates will be communicated each morning at 09:00 CET, ensuring that investors have the latest information on the refinancing auctions.
Refinancing Principles for Adjustable-Rate Mortgages
The Nykredit Group provides fixed-rate non-callable bullet covered bonds to facilitate the adjustment of ARMs. These bonds are sold based on a principle known as the "refinancing price." This pricing method is calculated from the average of combined prices acquired during the bond auctions.
If the volume of bonds available during an auction is inadequate to establish a consistent market price, the refinancing price will instead reference the Consolidated Reference Price as quoted on Nasdaq Copenhagen.
Refinancing Principles for Floating-Rate Loans
Floating-rate loans are set for refinancing through two separate auctions. For instance, one of the ISINs available is non-callable and will be offered and settled at a price of 100.20. Bids must align with the reference rate spread dictated for regular coupon fixing.
Potential investors will be informed that the reference rate is derived from Cita, fixed on the fourth last Business Day. Another ISIN is associated with Cibor for a similar pricing structure, affording clarity and consistency in the auction process.
Credit Ratings and Bid Requirements
All bonds auctioned through Capital Centres H and G hold an AAA rating issued by S&P. Bonds auctioned through Capital Centre J carry a government guarantee yet are unrated.
Bids on fixed-rate non-callable bullet covered bonds must specify the amount and proposed price. For bonds that are set to mature within 14 months, bids should reflect three decimal points, while other bids should only apply two decimal points.
Additionally, bidders must submit offers in multiples of DKK 100,000 for DKK-denominated bonds and EUR 10,000 for EUR-denominated offerings. Participants may place multiple bids within the same ISIN.
Types of Auctions and Allotment Process
The mortgage bonds issued via Capital Centre H and G will be auctioned through Nasdaq Copenhagen’s auction submarket CPH Auctions. Eligible participants include stockbrokers and investors with access to CPH Auctions, ensuring a robust auction environment.
A separate auction platform, Bloomberg’s auction system AUPD, will be utilized for bonds issued via Capital Centre J. Market users must establish access to this system prior to the auction dates.
Regarding allocation, bids made in terms of price that exceed the cutoff price will be fully settled. Conversely, bids made at the cutoff may be accepted on a proportional basis. Each auction's results will be promptly published through Nasdaq Copenhagen, ensuring transparency.
Reverse Facilities and Additional Offerings
To accommodate participants needing early access to bonds, Nykredit Realkredit A/S offers a reverse facility. This arrangement allows participants whose bids are accepted to purchase allotted bonds with a conventional two-day settlement period, with the value date set at a future date.
It is important to recognize that Nykredit Group retains the discretion to modify or postpone any announced offerings based on prevailing loan disbursements during the auction period.
Final Thoughts on Nykredit Auctions
Investors should be aware that prior to the final auction day, it must be determined if sufficient buyers exist for all covered bonds on offer. In circumstances where sales must be canceled, an immediate company announcement will follow to keep the market informed.
Frequently Asked Questions
What is the purpose of Nykredit's bond auctions?
Nykredit's bond auctions are designed to facilitate refinancing for adjustable-rate mortgages and floating-rate loans, enabling market participants to secure necessary funding.
How often are updates provided during the auction period?
Updates regarding the amounts offered for each ISIN are published daily during the auction period, allowing participants to make informed decisions.
What happens if there are insufficient bids for an auction?
If bids are insufficient, the refinancing price may be adjusted according to the Consolidated Reference Price to reflect market conditions.
Who can participate in the auctions?
Participants include stockbrokers and market investors with access to relevant auction platforms, ensuring a competitive bidding process.
What is the significance of the auction cut-off prices?
Cut-off prices determine which bids will be fully settled or accepted on a proportional basis, affecting the final allocation of bonds to bidders.
