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NIBC Bank Skips Option to Repay EU200 Million of Debt (Update1)
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By Neil Unmack
Feb. 3 (Bloomberg) -- NIBC Holding NV, the Dutch investment bank whose owners include J.C. Flowers & Co., didn’t use an option to redeem 200 million euros ($256 million) of mortgage- backed bonds at their expected call date.
The bank skipped the opportunity to repay the notes yesterday because it wasn’t “economically sensible,” said Ingeborg Klunder, an NIBC spokeswoman in the Hague.
NIBC follows Deutsche Bank AG’s decision not to repay a bond on its call date because of the cost to refinance the debt. “Virtually all” Dutch mortgage-backed bonds are still priced by banks on the assumption they will be repaid at their first call date, according to Chris Ames, head of asset-backed investment at Schroder Investment Management Ltd. in London.
NIBC sold the bonds in 2002 through a special-purpose company called SwAFE 1 BV set up to finance Dutch home loans originated by Zwitserleven, an Amsterdam-based unit of SNS Reaal NV. NIB later bought the mortgages from Zwitserleven, according to a Moody’s statement in 2004. The original issue of 800 million euros has shrunk as borrowers repaid their loans, according to data compiled by Bloomberg.
After the call date, the coupon on the top-rated portion of the bonds switches to a floating rate of 0.87 percentage point over the euro interbank offered rate, according to the prospectus for the issue. The new rate is less than the fixed 5.32 percent coupon paid before the call, based on three-month Euribor of 2.06 percent.
“It dramatically reduces the coupon the issuer has to pay,” Ames said in an interview. “If anyone has to sell, then the price will be significantly below par.”
Bondholders can lose when mortgage-backed bonds aren’t called because they are prevented from reinvesting their money elsewhere at higher rates.
Investors are demanding yields of as much as 3.95 percentage points more than benchmark rates to buy three-year European top- rated mortgage-backed bonds, nearly four times the yield a year earlier, according to Deutsche Bank AG.
In primis cosa ne pensate di questa news?
NIBC Bank Skips Option to Repay EU200 Million of Debt (Update1)
Email | Print | A A A
By Neil Unmack
Feb. 3 (Bloomberg) -- NIBC Holding NV, the Dutch investment bank whose owners include J.C. Flowers & Co., didn’t use an option to redeem 200 million euros ($256 million) of mortgage- backed bonds at their expected call date.
The bank skipped the opportunity to repay the notes yesterday because it wasn’t “economically sensible,” said Ingeborg Klunder, an NIBC spokeswoman in the Hague.
NIBC follows Deutsche Bank AG’s decision not to repay a bond on its call date because of the cost to refinance the debt. “Virtually all” Dutch mortgage-backed bonds are still priced by banks on the assumption they will be repaid at their first call date, according to Chris Ames, head of asset-backed investment at Schroder Investment Management Ltd. in London.
NIBC sold the bonds in 2002 through a special-purpose company called SwAFE 1 BV set up to finance Dutch home loans originated by Zwitserleven, an Amsterdam-based unit of SNS Reaal NV. NIB later bought the mortgages from Zwitserleven, according to a Moody’s statement in 2004. The original issue of 800 million euros has shrunk as borrowers repaid their loans, according to data compiled by Bloomberg.
After the call date, the coupon on the top-rated portion of the bonds switches to a floating rate of 0.87 percentage point over the euro interbank offered rate, according to the prospectus for the issue. The new rate is less than the fixed 5.32 percent coupon paid before the call, based on three-month Euribor of 2.06 percent.
“It dramatically reduces the coupon the issuer has to pay,” Ames said in an interview. “If anyone has to sell, then the price will be significantly below par.”
Bondholders can lose when mortgage-backed bonds aren’t called because they are prevented from reinvesting their money elsewhere at higher rates.
Investors are demanding yields of as much as 3.95 percentage points more than benchmark rates to buy three-year European top- rated mortgage-backed bonds, nearly four times the yield a year earlier, according to Deutsche Bank AG.
Ultima modifica di un moderatore:
al 15% circa parrebbe ultrasolida, ma di questi tempi....)
" Banca d'affari ",