(Updates pricing in second paragraph.)
Feb. 23 (Bloomberg) -- Sydbank A/S, Denmark’s third-largest listed lender, sold its first senior bonds since September 2010 as the funding outlook for Danish banks improves.
Sydbank, which has an A2 issuer rating at Moody’s Investors Service, sold 500 million euros ($665 million) of two-year senior unsecured floating notes, it said in a statement today. The notes were priced to yield 200 basis points more than the Euro Interbank Offered Rate, a banker involved in the transaction said.
Sydbank is testing funding markets a year after the failure of regional lender Amagerbanken A/S triggered senior creditor losses and shut most of Denmark’s 120 banks out of wholesale debt markets. Chief Executive Officer Karen Froesig said yesterday her bank is working on a senior debt sale after Danske Bank A/S, the country’s biggest lender, conducted a successful issue of the securities.
Danske this week sold 1 billion euros in five-year senior unsecured bonds at a yield of 230 basis points more than the benchmark mid-swap rate, according to a banker with knowledge of the transaction.
‘A Little Expensive’
“It’s a little expensive but it’s very positive that they were able to break through the market,” Froesig said yesterday. “It’s one thing to say the market is opening and another that Danish banks are able to access it.”
The bookrunners for Sydbank’s senior debt sale were BNP Paribas SA, Commerzbank AG and Danske Bank. Sydbank also said it’s buying back existing senior debt maturing Sept. 3. Its 1 billion-euro senior note was issued in September 2010.
The bank yesterday reported fourth-quarter net income of 52 million kroner ($9.3 million), compared with a Bloomberg estimate of 183 million kroner, after taking additional writedowns on farming loans.
The results were “rather disappointing,” Thomas Hovard, head of credit research at Danske Markets, said in a note. He cut his recommendation on Sydbank’s bonds to “hold” from “buy.”
--With assistance from Ben Martin in London. Editor: Tasneem Brogger, Christian Wienberg.
To contact the reporter on this story: Frances Schwartzkopff in Copenhagen at firstname.lastname@example.org
To contact the editor responsible for this story: Tasneem Brogger at email@example.com