Jyske Bank Mulls New Benchmark Bond Issue as Rates DeclineFrances Schwartzkopff
Jyske Bank A/S, whose benchmark euro bond due 2015 soared to a record high yesterday, 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, 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.
The bank is considering issuing bonds in euros for 3 billion kroner to 5 billion kroner, Novak said.
Jyske Bank predicts its funding costs will ease once it’s named a systemically important financial institution. Jyske has a long-term rating of Baa1 from Moody’s Investors Service and an issuer credit rating of A- from Standard & Poor’s. Denmark’s government-appointed Sifi committee today picked Jyske as one of its six recommendations.
“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.”
Jyske Chief Executive Officer Anders Dam has said the bank is ready to buy rivals to reach a goal of doubling its market share to as high as 15 percent. The bank may issue shares this year to fund that ambition, Mads Thinggaard, analyst at Nykredit A/S, said in a Feb. 27 note.