11.10.2024
AS LHV Pank successfully issued EUR250 million worth of four-year covered bonds. The covered bonds issued with the goal of diversifying the bank’s funding will be listed on Euronext Dublin.
The covered bonds backed by Estonian mortgage loans were sold to European institutional investors. In total 32 institutional investors participated in the offering and the issue was two-fold oversubscribed. Out of total order book 25% was received from central banks and international institutions, 25% from institutional investors in Germany and Austria, 40% from Nordic investors and 10% from institutional investors in other countries. The covered bonds were issued at a spread of 67 basis points over the mid-swap rate. Total re-offer yield of the covered bonds was 3.09%. The covered bonds will be listed on Euronext Dublin presumably within one week and the expected rating from Moody’s Investors Service Ltd is Aa1.
"We are pleased that yet another emission of our covered bonds was well received by investors. The issuance of covered bonds in the amount of 250 million euros took place based on the existing Covered Bond programme, just like LHV Pank's previous covered bond issues. The covered bonds offer LHV Pank stable and longer-term financing and a more diversified funding structure. Stable financing allows us also to offer more favourable loan terms to our loan customers in the long term," commented Juhan Peet, Head of LHV Treasury.
"For LHV, this was already the second issue on the international capital markets this year. The great interest in our offer demonstrates the investors' trust in LHV, the Estonian economic environment and also in the home loan market here. The Aa1 credit rating of the bonds by Moody's Investors Service confirms that LHV's bonds are of high quality and with a very low credit risk. We plan to use the possibility of raising money through covered bonds also in the future," added Peet.
According to Catlin Vatsel, head of LHV's private customer financing, LHV's home loan is currently gaining momentum. "Since we have a great ambition in financing Estonian people's home purchases and we offer flexible terms with a good interest rate, LHV's home loan portfolio has grown strongly this year. During the summer months, every fourth home loan in Estonia was taken from LHV. Home loans are a very long term loan product, and covered bonds as a source of financing allow us to continue on the set course," commented Vatsel.
LHV started issuing residential mortgage loans in 2016. The European Central Bank granted LHV Pank an authorisation to issue covered bonds in 2020.
Information on LHV’s covered bonds is available at: https://investor.lhv.ee/en/covered-bonds.
LHV Group is the largest domestic financial group and capital provider in Estonia. The LHV Group’s key subsidiaries are LHV Pank, LHV Varahaldus, LHV Kindlustus, and LHV Bank Limited. The Group employs over 1,100 people. As at the end of August, LHV’s banking services are used by 441,000 clients, the pension funds managed by LHV have 118,000 active clients, and LHV Kindlustus protects a total of 168,000 clients. LHV Bank Limited, a subsidiary of the Group, holds a banking licence in the United Kingdom and provides banking services to international financial technology companies, as well as loans to small and medium-sized enterprises.
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