Luminor’s Covered Bond Issuance Receives Award for Excellence
The Covered Bond Report has presented Luminor with an award for excellence as The Pioneer for being the first to issue covered bonds from the Baltic region.
Luminor issued the first covered bonds in the size of EUR 500 million from the Baltic region on March 4 this year. The 5-year covered bonds are listed on the Irish Stock Exchange.
Luminor CFO Jonas Eriksson says: “I am very pleased with this acknowledgment. In addition to helping us reach a fully independent funding structure, it was a great step forward in developing the Baltic capital market.”
Luminor issued EUR 500m of covered bonds at a spread over mid swap of 25 bps. Considering the current extraordinarily low euro interest rates, the final yield ended up at -0.18%, which represents the record low rate paid by a Baltic non-government issuer. Almost all of the orders originated from institutional investors outside of the Baltics. Orders from central banks and supranational investors formed 20% and orders from German institutional investors 43% of the total. The orders were originated from close to 80 investors across Europe from 18 different countries.
Luminor is planning to continue issuing Covered Bonds adding the Lithuanian and Latvian assets to the cover pool. Inaugural issue was based on Estonian assets.
The legislation enabling the issuance of covered bonds under the Estonian Covered Bonds Act entered into force in Estonia in March 2019.
On 19 December 2019, the European Central Bank issued a licence to Luminor to issue covered bonds following the assessment of the Estonian Financial Supervision Authority. Luminor is the first bank in the Baltic countries to receive such a license.
On 13 January 2020, Moody’s assigned Luminor a provisional (P) Aa1 rating for Mortgage Covered Bonds, which is currently the highest credit rating in the Baltic countries.