Sydbank Sells First Senior Unsecured Notes Since September 2010

Sydbank A/S (SYDB) (SYDB), Denmark’s third-largest listed lender, is selling its first senior bonds since September 2010 as the funding outlook for Danish banks improves.

Sydbank, which has an A2 issuer rating at Moody’s Investors Service, will sell two-year senior unsecured floating notes, it said in a statement to the stock exchange today. The notes may be priced to yield about 200 basis points more than the Euro Interbank Offered Rate (EUR003M), a banker involved in the transaction said.

“This transaction will be priced in the near future, subject to market conditions,” the bank said. The securities will be listed on the London Stock Exchange.

Sydbank is testing unsecured funding markets a year after the failure of regional lender Amagerbanken A/S (AMAG) triggered senior creditor losses and shut most of Denmark’s 120 banks out of wholesale debt markets. Sydbank has 1 billion euros ($1.3 billion) in senior debt coming due in September, according to Bloomberg data. That note was issued in September 2010.

Chief Executive Officer Karen Froesig said yesterday her bank is working on a senior debt sale after Danske Bank A/S (DANSKE), the country’s biggest lender, conducted a successful issue of the securities. Danske this week sold 1 billion euros in five-year senior unsecured bonds at a yield of 230 basis points more than the benchmark mid-swap rate, according to a banker with knowledge of the transaction.

‘A Little Expensive’

“It’s a little expensive but it’s very positive that they were able to break through the market,” Froesig said yesterday. “It’s one thing to say the market is opening and another that Danish banks are able to access it.”

The bookrunners for Sydbank’s senior debt sale are BNP Paribas SA, Commerzbank AG and Danske Bank. Sydbank also said it will buy back existing senior debt maturing Sept. 3 at a price of 100.175 percent of the nominal value, plus accrued interest.

The bank yesterday reported fourth-quarter net income of 52 million kroner ($9.3 million), compared with a Bloomberg estimate of 183 million kroner, after taking additional writedowns on farming loans.

The results were “rather disappointing,” Thomas Hovard, head of credit research at Danske Markets, said in a note. He cut his recommendation on Sydbank’s bonds to “hold” from “buy.”

To contact the reporter on this story: Frances Schwartzkopff in Copenhagen at fschwartzko1@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net

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