Denmark’s $17 Billion Rescue Gives Banks Carry Trade: Mortgages
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Denmark, the world’s third-biggest mortgage bond market, is about to get as much as $17 billion from banks looking for somewhere to invest cheap central bank cash, helping to end the longest losing streak since January.
Danske Bank A/S, the country’s biggest lender, estimates most of the proceeds from three-year Danish central bank loans will go into similar-maturity assets in Denmark’s $480 billion mortgage-bond market, where yields exceed returns on government debt. The central bank will provide the funds at 0.2 percent at its second and last offering of three-year credit on Sept. 28.