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An issue of mortgage covered bonds by Terra BoligKreditt is admitted to listing on Oslo Børs today. This marks the start of trading in what may become an important new type of bond in the Norwegian market over time.
Mortgage covered bonds, also known as mortgage bonds, are bonds issued by credit institutions that provide residential mortgage loans within a 75% loan to value ratio. In order to help the development of a liquid secondary market for this type of bond in Norway, Oslo Børs now allows covered bonds to be admitted to listing. The first mortgage covered bond issue admitted to listing is issued by Terra BoligKreditt AS. The issue is for NOK 1.5 billion, with a two-year maturity.
There is now a large mortgage bond market in Europe, and Oslo Børs offers listing of this kind of bond issue on terms that are competitive with marketplaces such as the Luxembourg and London stock exchanges.
“We have a competitive listing offer for Norwegian mortgage bonds, and our ambition is to see the development of a large and liquid market for this type of bond over time”, comments Bodil Østby, Vice President of Oslo Børs responsible for the fixed income department.
“When we chose to list this bond, Oslo Børs was the natural choice. We believe the new mortgage covered bonds will become an important and popular product at Oslo Børs”, says CEO Tom Høiberg in Terra BoligKreditt AS.
New legislation and regulations for covered bonds came into force on 1 June this year. The new provisions apply to credit institutions that issue bonds covered by security made up of government-backed loans or loans secured against residential properties or other real estate. For further information on the new legislation and regulations, see the Ministry of Finance website: http://www.regjeringen.no/en/dep/fin/Press-Center/Press-releases/2007/New-Norwegian-legislation-on-covered-bon.html?id=467946
