Ready to draw Mortgages Foreign Demand Registration in Denmark

97 billion U.S. dollars of Denmark, the mortgage-bond auction is about to attract an unprecedented demand from international investors such as sovereign debt crisis of Europe is increasing appetite for top-level titles.

Nykredit Bank A / S, the country's largest issuer of debt, Denmark Realkredit and more of the nation's banks offer mortgage-linked bonds with maturities of one to five years in auctions beginning today. Foreign funds to buy up to 20 percent of the debt, a record and up 15 percent last year, according to Danske Bank A / S.

490 billion U.S. dollars of Denmark mortgage bond market, the third largest after the U.S. and Germany, proved resilient during the global financial crisis, with prices rising 6.57 percent in 2008, 7.1 percent in 2009 and 5.4 percent this year, according to Danske Bank Mortgage's index bond market. The titles offer an alternative to European government bonds hit by a debt crisis was spreading to the rescue for Greece and Ireland.

"There may be an incentive for foreign investors to have a higher focus on the Danish market compared to last year because of the turmoil in the European bond market," said John Madsen, the chief economist at Nykredit in Copenhagen. "The market in the Nordic countries, especially in the Danish market is in a more stable situation."

Danish banks tend to hold three auctions of bonds each year. In 2009 represented 25 percent of the mortgage bond market, according to government data. The sale in the next two weeks is the most important annual auctions where the securities are issued new rates for existing notes are reset. Small auctions in March and September resulted in $ 18 billion of the issue, according to Madsen Nykredit is.

Yield spread

Elsewhere in credit markets, the extra yield investors demand to own company bonds rather than government debt of similar maturity was unchanged at 169 basis points, or 1.69 percentage points, according to the World Bank Latin Merrill Lynch Corporate Market general index. Average yields of 3.7 percent.

The cost of insuring the euro-zone government bonds from default soared to records on concern the fiscal crisis is expanding, while Caterpillar Inc. sold 1 million yuan ($ 150 million) of debt in the second issue of Hong Kong by a U.S. company in China's currency. Gifts and accessories retailer Spencer Spirit Holdings Inc. was one of the borrowers to postpone debt sales.

Sovereign Swaps

The Markit iTraxx Index SovX Western Europe 15 governments contracts rose 3 basis points to a record 184, according to CMA. Spain increased 8 basis points to a record based on closing prices of 303 and Ireland rose 11.5 basis points to 591, after reaching a record.

China's first credit-default swaps denominated in yuan began operations in the interbank bond market as the country expands its financial system, according to the National Association of Institutional Investors in financial markets.

Four contracts guaranteed with a par value of RMB 480 million changed hands yesterday, the bond market regulator, said in a notice published on its website.

Swaps credit-default pay the buyer face value in exchange for the underlying securities or the cash equivalent of a company or country do not adhere to its debt agreements.

Cat Bonds

Caterpillar, the world's largest maker of construction equipment, sold two notes per cent in December 2012 in Hong Kong through its unit of Caterpillar Financial Services Corp. Goldman Sachs Group Inc. managed the sale of the Peoria company, based in Illinois, said a person familiar with the offering who declined to be identified because the market was private.

The operation followed McDonald's Corp. 's 200 million yuan in bonds to three years in September, the first sale in the currency by a foreign company in the former British colony, according to the data.

Spencer Spirit, gift and accessory retailer, withdrew its $ 150,000,000 sale of senior notes due in 2016, according to a person familiar with the deal who requested anonymity because the trade was private. At least six other companies in the U.S., most with scores of garbage, put away the expected sales of debt this week, the credit markets weakened amid growing concern about European levels of debt sovereign.

Tirado deals

In Asia, Hong Kong Electric Holdings Ltd., rated A, S & P's fifth highest investment grade, rated junk Yuzhou joined Properties Co. and Vietnam National Coal Industries in the withdrawal of bids, said people familiar with the operations, said.

Junk bonds are high risk, high yield debt rated below Baa3 by Moody's and below BBB-by Standard & Poor's.

Bonds Fairfield, Connecticut-based General Electric Co. were the most actively traded U.S. corporate securities by dealers, with 47 transactions of $ 1 million or more, according to Trace, the bond trading service of the Financial Industry Regulatory Authority.

The S & P / LSTA U.S. Leveraged Loan 100 Index fell 0.05 cents to 91.8 cents, the fourth consecutive fall day Prices in the index, which measures the 100 largest dollar loans first lien leveraged, fell to its lowest level since November 3.

In emerging markets, yields fell 10 basis points related to 244 basis points, according to JP Morgan index. It was the biggest drop since Oct. 26.

Danish mortgage bonds

Denmark's mortgage bonds have not suffered a defect since they were introduced after the fire of Copenhagen in 1795 large. Mortgage lenders can not take customer deposits, so they use mortgage to raise funds and spread the risk of real estate loans.

"The Danish market for mortgage bonds is the only one that has survived without a scratch through the financial crisis," said Jens Kristian Kimper, Danmark Realkredit analyst, the mortgage unit of Danske Bank bonds and the second largest provider Denmark, the bonds after Nykredit A / S. "The interest of foreign investors is increasing."

The prices investors pay in the auctions to determine the rates lenders can charge. rate the central bank benchmark interest is 1.05 percent, compared with 1 percent for the European Central Bank and a range of zero to 0.25 percent for the Federal Reserve.

Danske Bank index of Danish mortgage bonds rose to 124,675 on November 23, approaching the record high of 125,642 on 12 October to 4 January to 118.3. the nation's mortgage bonds increased 23 percent since early 2007, the index shows.

"The liquidity of the Great '

"International investors can not get something similar in euro-land," said Jens Peter Soerensen, chief analyst at Danske Bank in Copenhagen. Danish mortgage bonds also "high liquidity," he said.

The event coincides with government bonds of the nation, who have returned this year by 10.5 percent on average, second only to the 14.8 percent increase in the debt of South Africa from the 26 markets followed by  European Federation of Financial Analysts Societies indexes.

Danish house prices rose 3.3 percent in the third quarter compared with the same period last year, the Copenhagen-based Association of Danish Mortgage Banks said in a statement on its website on October 26.

Denmark's economy will expand 2 percent this year and 2.3 percent in 2011, compared with 1.7 percent and 1.5 percent growth for the 16 nations using the euro, IMF International said in its World Economic Outlook last month. Since June, the nation's currency, the crown has appreciated 8.83 percent.

The maximum rating

If mortgage debt "of well known names such as Nykredit offers some pickup compared to government bond rating remains AAA that could be attractive to money market funds," said Maud Debreuil-Chevroton, a fund manager Paris-based Axa Investment Managers. "The Danish mortgage bonds will enjoy the flight to quality of major international investors seeking risk away from the periphery of Europe."

Last year a record 115 billion U.S. dollars from the auction of mortgage bonds, said yields in the lowest level since the variable rate loan interest began 13 years ago, lenders including Danmark Realkredit said. Realkredit Denmark, the country's mortgage lender second largest, sold tickets for a year at an average yield of 1.78 percent and three-year bonds at 2.81 percent, the lowest since the values are introduced. The five-year notes sold at an average of 3.34 percent, at least since 2006.