STOCK MARKET WATCH -- Monday, 15 December 2014

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19. Riskiest Bank Debt Issuance Wins Moody’s Favor in Sweden

http://www.bloomberg.com/news/2014-12-15/riskiest-bank-debt-wins-moody-s-favor-in-sweden.html


Sweden’s decision to impose tougher bank capital rules earlier than most other countries is proving to be a gift to the industry that keeps on giving.

The country’s biggest banks are set to win investor approval when they step up issuance of the riskiest bank bonds, additional Tier 1 capital, according to Moody’s Investors Service. The rating company predicts Swedish banks will sell as much as $2.9 billion of the securities by 2016.

“We do think there will be investor interest in these,” Oscar Heemskerk, associate managing director in Moody’s EMEA Financial Institutions Group, said by phone on Friday. “That comes partly because the Swedish banks, if you look at their finances, have performed strongly compared with their European peers.”

The country’s biggest banks have already started issuing additional Tier 1 debt, which is written down if pre-set capital levels are breached, at record-low coupons. Nordea Bank AB (NDA), Scandinavia’s biggest lender, sold $1.5 billion in the securities in September at the lowest dollar yields recorded. One month later, Swedish banks topped the European Banking Authority’s stress tests by achieving the highest scores in an adverse scenario.