Issuance

Danish covered bonds are generally issued in three different ways, either on tap, by auction or as block issues. Covered bonds under the pass-through system are usually issued on tap. Long-term callable bonds and long-term capped floaters typically have an opening period of three years with tap issuance on a day-to-day basis. The relatively long opening period enables issuers to build bond series with sizeable outstanding amounts.

Nykredit covered bonds are issued on tap in combination with auctions. The daily tap issuance matches the daily disbursement of loans, whereas the auctions are held to refinance maturing bullet bonds issued to fund adjustable-rate mortgage loans and floating-rate mortgage loans with interest rate ceilings with shorter maturities than the loans.

In principle, the bonds can be issued on any stock exchange, but in practice, all issuing takes place through OMX, The Nordic Exchange, Copenhagen.

In 2006, Nykredit expanded its interest rate adjustment activities into three annual auction processes in March, September and December. Until 2005, Nykredit held one annual auction in December.