EUROS
BLEAK OUTLOOK FOR DANSKE AT1s
WHILE FINES UP IN THE AIR
DANSKE BANKSû!DDITIONALû4IERûûBONDSûHAVEû
probably over-reacted to evidence of money
LAUNDERING ûACCORDINGûTOû#REDIT3IGHTS ûBUTû
UNCERTAINTYûABOUTûPOTENTIALûlNESûMEANSûTHEYû
AREûUNLIKELYûTOûRECOVERûINûTHEûSHORTûTERM
4HEûLENDERSû!4ûPAPERûHASûDROPPEDû
around six points since June as concerns
HAVEûMOUNTEDûABOUTûTHEûSUMSûINVOLVED û
WITHûYIELDSûBP
BPûHIGHERûONûTHEû53û
dollar and 300bp-400bp higher on the euro
SECURITIES
That means they have gone from being
AMONGûTHEûTIGHTESTû!4SûINûTHEûSECTORûTOûSOMEû
OFûTHEûHIGHESTûYIELDING û#REDIT3IGHTSûSAID
$ANSKESûõMûûPERPETUALû.#û
"" "" ûWASûBIDûAROUNDûûLASTû&RIDAY û
ACCORDINGûTOû%IKONûPRICES ûFORûEXAMPLE ûJUSTû
INSIDEû)NTESASûõBNûû0.#û"A
""
" ûATû ûEVENûTHOUGHûTHEûLATTERûHASû
AûMUCHûLONGERûCALLûDATE
The widening has also stoked fears
around extension risk in the case of
$ANSKESûS ûWHICHûHAVEûAûRESETûSPREADû
OFûlVE
YEARûMID
SWAPSûPLUSûBP ûAROUNDû
ûATûTODAYSûRATESûGIVENûTHEIRûCURRENTûYIELD
h7EûTHINKûTHEYûLOOKûGOODûVALUEûINûTHEû
LONGERûTERMûATûTHESEûLEVELS ûGIVENû$ANSKEû
Bank’s ability to absorb even quite large
lNES vû#REDIT3IGHTSûWROTEûINûAûNOTE
“But the trouble is we see no catalyst in
the short term that will allow the bonds to
RALLY ûGIVENûTHATûREGULATORYûINVESTIGATIONSû
AREûLIKELYûTOûDRAGûONûFORûMONTHS ûWITHûTHEû
risk of further damaging revelations
EMERGINGûABOUTûITSû%STONIANûOPERATIONSv
The Danish Financial Supervisory
!UTHORITYûHASûRAMPEDûUPû$ANSKEû"ANKSû
0ILLARûûADD
ONûTOûANûABSOLUTEûMINIMUMûOFû
$+RBNû53BN ûINCREASINGûITSû
SOLVENCYûNEEDûITSû32%0ûRATIO ûFROMûûTOû
ûATû*UNEûûû4HISûMUSTûBEûMETû
THROUGHû#OMMONû%QUITYû4IERûûCAPITAL
Danske Bank has therefore increased its
#%4ûTARGETûTOûAROUNDûûPREVIOUSLYû
ûANDûTHEûTARGETûFORûITSûTOTALûCAPITALûRATIOû
TOûOVERûûPREVIOUSLYûABOVEû û)Tû
ALREADYûMEETSûTHOSEûREVISEDûTARGETS ûBUTû
discontinued its share buyback
PROGRAMMEûFORûûEARLIERûTHISûMONTHûTOû
PRESERVEûCASHHARD TO CALL
)TûISûDIFlCULTûTOûPREDICTûPOTENTIALûlNESûFORû
$ANSKEû"ANK û#REDIT3IGHTSûSAYS ûSINCEûINû
previous money laundering cases involving
%UROPEANûBANKSûTHEREûHASûBEENûNOûOBVIOUSû
FORMULAûTOûDETERMINEûTHEûSIZE
(OWEVER ûTHEûANALYSTSûDEEMûITûUNLIKELYû
THATû$ANSKEû"ANKûSHOULDûBREACHûITSû32%0û
û
LETûALONEûITSû-$!û
ûTHRESHOLDS ûTHANKSûTOûITSû
STRONGûCAPITALISATIONûANDûPROlTABILITYû
û
unless it receives an unprecedentedly huge
lNE
h7HILEûAûlNEûOF ûSAY ûõBNûWHICHûISûITSELFû
higher than many market estimates at this
STAGE ûWOULDûWIPEûOUTûNETûPROlT ûITûWOULDû
NOTûERODEûTHEûBANKSû#%4ûCAPITALûOFû
$+RBNûõBN ûASûATûû*UNEû vû
THEYûWROTE
h.ONETHELESS ûAûVERYûSUBSTANTIALûlNEû
COULDûERODEûITSû#%4ûRATIOûTOûAûLEVELûWELLû
BELOWûITSûTARGETûRATIO ûWHICHûWOULDû
therefore raise questions about dividend
payouts until the bank was able to restore its
CAPITALûRATIOSv
NORDEA is the latest bank to be the target
OFûSIMILARûALLEGATIONSû(ERMITAGEûFOUNDERû
ANDû#%/û"ILLû"ROWDERûHASûIDENTIlEDûASSETSû
linked to money laundering of more than
53M ûACCORDINGûTOûRECENTûPRESSûREPORTS
)TSû!4ûSECURITIESûHAVEûPROVEDûRESILIENTûINû
SECONDARY ûHOWEVERû)TSûõMûû
0.#S ûFORûEXAMPLE ûHAVEûWIDENEDûTOû
ûFROMûAROUNDûûSINCEûTHEûNEWSûlRSTû
BROKEûINû/CTOBER ûBUTûTHEûSUBORDINATEDû
sector more broadly has weakened as
MARKETSûREMAINûVOLATILE
Swedish lender SWEDBANK downplayed
concerns its Baltic operations could be hit by
similar money-laundering issues as it
REPORTEDûAûHIGHERûTHANûEXPECTEDûNETûPROlTû
FORûTHEûTHIRDûQUARTERûLASTû4UESDAYSTERLING
JUST GROUP RALLIES AS PRA BUYS TIME
ON LIFETIME MORTGAGESJUST GROUP’s bonds rallied last Thursday after
THEû0RUDENTIALû2EGULATIONû!UTHORITYû
unexpectedly delayed the introduction of
new rules forcing companies to set aside
more capital against equity release
MORTGAGES
4HEû02!ûHADûBEENûPLANNINGûTOûIMPLEMENTû
the proposals it outlined in a consultation
LAUNCHEDûINû*ULYûONû$ECEMBERûû(OWEVER û
having assessed industry feedback it has
now decided that the implementation date
WILLûNOTûBEûBEFOREû$ECEMBERûû
%QUITYûRELEASEûMORTGAGES ûALSOûKNOWNûASû
LIFETIMEûMORTGAGES ûENABLEûHOMEOWNERSûTOû
BORROWûAGAINSTûTHEûVALUEûOFûTHEIRûPROPERTY û
AûLOANûTHATûISûPAIDûBACKûWHENûTHEYûDIEû4HEû
02!ûWANTSûlRMSûINVESTEDûINû%2-SûTOûBONDS FIGALL FINANCIAL INSTITUTION BONDS IN EUROS
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues €(m) (%)
1 BNP Paribas 67 15,587.31 9.1
2 UBS 37 14,321.70 8.4
3 HSBC 56 12,031.67 7.0
4 SG 39 11,978.42 7.0
5 Deutsche Bank 49 10,600.94 6.2
6 Natixis 30 9,267.94 5.4
7 Credit Agricole 33 8,315.45 4.9
8 JP Morgan 45 7,863.98 4.6
9 Citigroup 34 6,298.89 3.7
10 Morgan Stanley 31 6,244.72 3.7
Total 282 170,727.24
Including banks, insurance companies and finance companies. Excluding
equity-related and covered bonds. Excluding publicly owned institutions.
Source: Refinitiv SDC code: N11
ALL SUBORDINATED FINANCIAL INSTITUTION
BONDS (ALL CURRENCIES)
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues US$(m) (%)
1 HSBC 33 6,394.25 9.1
2 Barclays 17 5,223.26 7.4
3 UBS 18 4,929.12 7.0
4 JP Morgan 29 4,571.96 6.5
5 BNP Paribas 22 3,934.72 5.6
6 Citigroup 24 3,835.11 5.5
7 Morgan Stanley 21 3,830.29 5.5
8 Goldman Sachs 16 3,671.70 5.2
9 Credit Suisse 16 3,453.71 4.9
10 BAML 20 3,404.02 4.8
Total 112 70,204.13Source: Refinitiv SDC code: J3aALL GLOBAL AND EUROMARKET YEN BONDS
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues ¥(m) (%)
1 Nomura 14 128,783.33 18.7
2 Sumitomo Mitsui Finl 10 111,696.71 16.2
3 Mizuho 13 104,480.04 15.2
4 BNP Paribas 2 55,500.00 8.1
5 Mitsubishi UFJ MS 5 45,713.35 6.6
6 Daiwa Securities 10 32,716.67 4.7
7 BAML 2 31,833.33 4.6
8 MUFG 2 29,833.33 4.3
9 Goldman Sachs 3 28,680.02 4.2
10 HSBC 2 15,000.00 2.2
Total 50 689,279.39
Excluding equity-related debt. Including preferreds.
Source: Refinitiv SDC code: K10
ALL SAMURAI BONDS
BOOKRUNNERS: 1/1/2018 TO DATE
Managing No of Total Share
bank or group issues ¥(m) (%)
1 Mizuho 47 432,381.67 21.1
2 Sumitomo Mitsui Finl 39 410,761.67 20.1
3 Mitsubishi UFJ MS 40 345,281.67 16.9
4 Nomura 38 317,456.67 15.5
5 Daiwa Securities 36 298,653.33 14.6
6 Natixis 11 47,120.00 2.3
7 BAML 3 46,666.67 2.3
8 HSBC 3 40,000.00 2.0
9 SG 3 32,000.00 1.6
10 Barclays 2 29,520.00 1.4
Total 58 2,047,800.00
Excluding equity-related debt.
Source: Refinitiv SDC code: K11