On the proposal of the
LHV began issuing home loans in 2016, although sufficient volume for issuing covered bonds was only achieved following the acquisition of the private customer loan portfolio of Danske Bank A/S. The bank will now continue making preparations for obtaining a credit rating for the covered bonds and to executing the bond issue, subject to the market situation. LHV Pank is planning to offer covered bonds to European institutional investors.
Covered bonds will contribute significantly to the improvement of the funding structure of LHV Pank. While LHV has always maintained a conservative position regarding liquidity management – with deposits being nearly double the volume of the loan portfolio – covered bonds offer an opportunity to diversify funding and reduce costs. Home loans are very long-term and therefore require a stable source of funding. The cost of more expensive shorter term deposits, which were raised through deposit platforms, can be reduced by issuing covered bonds that are secured by home loans. In the long run, this will also lead to more favourable cost of financing for clients.
The importance of covered bonds also lies in the fact that they provide LHV with the opportunity to include outside financing during more complicated periods, as they provide the best possible level of risk to investors. Covered bonds also provide LHV with the opportunity to use liquidity offers from the
Communication Manager
Phone: +372 502 0786
Email: priit.rum@lhv.ee
© OMX, source