Fixed Income Products
Most of the trading in Danish Fixed Income cash products is done bilaterally between professional investors. The trades are reported to Nasdaq Copenhagen for dissemination to the Danish FSA, market vendors and other stakeholders.
Nasdaq collects indicative pricing from market makers through its trading system, and these quotes are then distributed to market data vendors that provide the data to professional investors.
The Danish market for mortgage-backed bonds, commonly referred to as covered mortgage bonds, is large relative to the bond market as a whole. The cash flow to the owners of mortgage-backed bonds depends on the payments made by borrowers on the underlying mortgages. Although these payments are structured in amortization schedules, often borrowers are allowed to pay off their debt earlier than planned.
Danish mortgage bonds are uniquely suited to the ways in which property/real estate investments are funded in Denmark. The strengths of these products are:
- The Danish law for issuance of mortgage bonds is stringent
- Issuance is very cost-efficient
- The distribution network is extensive
- A global “balance principal” applies
- The principle of low investor risk has been maintained since the 19th century
- To date, no investors have lost their invested capital and no mortgage credit institution/mortgage credit bank has ever gone bankrupt
- A clear majority of the Danish mortgage bonds have been rated by internationally recognized rating agencies
All Danish government bonds and notes can be traded at Nasdaq Copenhagen. These are considered ‘low risk securities’ and tend to attract significant interest from foreign investors.
Over the last few years, Nasdaq Copenhagen has witnessed an increased interest in both issuing and investing in structured bonds. We have therefore created a special market for the issuing and trading of these bonds.
By creating a special market for structured bonds, Nasdaq Copenhagen hopes to increase transparency. We also expect this market to grow, creating higher turnovers, increased circulation, and more diversification.
Corporate and Other Bonds
Nasdaq Copenhagen has a special market for corporate bonds, convertible bonds, covered bonds and other bonds. This market is called Corporate and Other Bonds. By having a separate market for these bonds we intend to increase focus on the many different bonds that can be traded at Nasdaq Copenhagen.