Jyske Bank Considers New Benchmark Bond Issue as Rates Decline
Jyske Bank A/S (JYSK), whose benchmark euro bond due 2015 soared to a record high today, is considering issuing a similar note later this year.
“The funding gap is closing, so out of pure liquidity aspects, we don’t really need to do any funding, but we prefer to maintain a solid profile,” Merete Poller Novak, head of strategic funding at Jyske, said in a phone interview. “We are keen on keeping a rare but regular presence in the debt capital markets aiming at one public benchmark a year.”
Jyske Bank, Denmark’s second-largest listed lender, may sell bonds for as much as 5 billion kroner ($870 million) later this year, Novak said. The steady issuance will help the bank hold investors’ attention, she said.
Jyske, which last month reported a 21 percent increase in full-year net income, funds most of its lending through deposits. At the end of last year, savings covered 92 percent of its loan portfolio, the Silkeborg, Denmark-based lender said Feb. 26. The bank taps the interbank market, issues commercial notes, does private placements and sells bonds for the rest.
Jyske sold 500 million euros ($647 million) in floating rate bonds in November, after getting almost 800 million euros in offers, according to its annual report. The bond, which was sold at a discount, is now trading above par at 100.827, according to data compiled by Bloomberg.
“In case markets remain attractive, we could be looking at issuing a new public 2.5 to 3-year benchmark toward the end of 2013,” Novak said.
Jyske Bank predicts its funding costs will ease once it’s named a systemically important financial institution. Denmark’s government-appointed Sifi committee is due to release its report tomorrow. Jyske has a long-term rating of Baa1 from Moody’s Investors Service and an issuer credit rating of A- from Standard & Poor’s.
“A Sifi stamp will be positive,” Novak said. “We are already living up to the expected requirements but we won’t see any upside until we get the official stamp.”
The Danish Business Ministry will release its report on Sifis tomorrow at about 9 a.m. local time, followed by a 10 a.m. press briefing, spokesman Soeren Moeller Nielsen said today.
To contact the reporter on this story: Frances Schwartzkopff in Copenhagen at firstname.lastname@example.org