Danske Bank New AT1 Bond Gets Investment Grade Status at S&P

Standard & Poor’s raised the rating on Danske Bank A/S’s additional Tier 1 note issued in March, bringing the security to investment grade.

S&P now rates the note BBB-, versus BB+ when it was issued, it said in a statement late yesterday. The yield on the 5.75 percent perpetual note dropped to 5.658, its lowest since being issued last month. All other hybrid ratings were raised to BBB from BBB-, the company said.

The rating action was part of a series of upgrades affecting bonds sold by Denmark’s biggest bank. Danske’s issuer rating was also raised one step to A from A-, S&P said. The decision follows the lender’s efforts to wind down its unprofitable business in Ireland, as well as an improvement in its loan book, S&P said.

“We consider that risks in Danske Bank’s Irish portfolio have decreased meaningfully and expect group losses to continue to decline, remaining well below our normalized loss level,” S&P said in the statement. “We have therefore revised our assessment of Danske Bank’s risk position to adequate from moderate.”

Danske Bank sold 750 million euros ($1.03 billion) in perpetual notes on March 5. The bank has an option to prepay from April 6, 2020. The note will pay a discretionary coupon of 5.75 percent.

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