Mortgage bank operations and bonds
- OmaSp can issue bondsthrough own balance sheet, no separate juridical entity needed.
- The total loan program for senior and covered bonds of EUR 1,500m was established in November 2017.
- OmaSp issued EUR 250 million covered bond in December 2017. It matures in December 2022.
- The first covered bond was tapped in June 2018 with an EUR 100 million issue.
- Finnish covered bonds have high demand especially in Central Europe.
- The declining funding costs have been a result of multiple factors and one of them is covered bond program with competitive yields.
- As part of starting mortgage bank operations, OmaSp applied to become a monetary policy counterparty and a TARGET2 counterparty. The bank’s TARGET2 account was opened at the Bank of Finland in September 2017.
- In November 2017, OmaSp set up a EUR 1.5 billion covered bond program, in which the bank issued a total of EUR 250 million of covered bonds in December 2017. The amount of the loan was increased by EUR 100 million in June 2018. The loan matures in 2022.
Certificates of deposits
OmaSp uses certificates of deposits (CD’s) actively for short term funding and liquidity management in order to receive further flexibility to refinancing. The market is currently well functioning from OmaSp’s point of view.
Average funding costs have declined
OmaSp’s average funding costs have declined during 2015 and 2018 Intrest expenses were 0.48 % of total funding base in 2015 and 0.28% in June 2018. (1) The declining funding costs have been a result of multiple factors
- Strong solvency and healthy risk profile
- Covered bond program with competitive yields
- Declined deposits margins
- S&P credit rating, long-term BBB+
1) Total funding base = liabilities to credit institutions + Liabilities to the public and general government + Debt securities issued to the public + Subordinated liabilities